#5: John Toomey – Private Equity Masters Ep.01, HarborVest Partners, EP.200 

Investment Dynamics

The dynamics of co-investments in private equity involve intricate decision-making processes. John Toomey explains that the role of a co-investor can vary significantly based on the size of the investment and the relationship with the lead sponsor. In some cases, co-investors may act like limited partners, while in others, they may take a more active role, such as securing board seats 1. However, challenges arise when market conditions shift, requiring additional capital or strategic decisions. Toomey notes, "If we think that the risk reward isn't there and there's a good chance of throwing good money after bad, we walk" 2.

   

Manager Relationships

Manager relationships are crucial in co-investment decisions, providing insights into manager effectiveness and leadership. Toomey highlights the value of these relationships, especially during club deals where multiple managers are involved. He states that understanding who truly drives the business decisions is invaluable for primary evaluations 3. The evolution of co-investments into a distinct sub-asset class has been driven by these relationships, with managers seeking trusted partners to fill investment gaps. "The market that you see today actually started in very much the same identical way," Toomey reflects on the industry's growth 4.