Our network of Private Equity Co-Investment (PECO) participants offers a unique partnership approach providing family offices, insurance companies, endowments, and other institutional investors with a unique opportunity to support the financing needs of M&A Intermediaries. These M&A firms have earned co-investment rights in specific private equity deals with many leading private equity firms in the middle and lower middle market ($50 million to $500 million in enterprise value).
Utilizing our proprietary access network to M&A intermediaries, PECO becomes informed of prescreened, vetted and investment committee approved private equity sponsored investment opportunities. These deals are funded by leading private equity firms and cover a wide range of business sectors. PECO’s participating investors have a unique opportunity to evaluate deals not otherwise available at large. PECO’s deals typically range from $100 million to $500 million in enterprise value. Most co-investment opportunities are in the $1 million to $25 million range per transaction. However, about one third of the co-investment opportunities have been between $25 million to $60 million.
Many participants in the PECO network write a check on each occasion that they actually select a co-investment brought by an M&A Intermediary, thus avoiding idle cash that often sits in committed funds which dilutes returns. These participants all have professional investment staffs that can quickly devote the time necessary to thoroughly evaluate deals on a short-term basis. PECO provides these investors with general background on the co-investment rights received by M&A intermediaries as a result of their placement of a deal with a private equity sponsor. In these cases, PECO serves as a network for co-investment opportunities for family offices and institutional investors who make investment decisions on a deal-by-deal basis.
In addition, through an actively managed Registered Investment Advisor, PECO facilitates co-investment opportunities to about 50 family offices with a proprietary investment management team making all the investment decisions on their behalf. Both PECO networking activities are based on the same source of co-investment rights. PECO’s investors benefit because we source investment opportunities arising as a matter of contractual right – as compared to a private equity GP or LP attempting to lay off risk by bringing in additional co-investors.
The basis for creating the two PECO networks lies in the fact that, in many cases, M&A intermediaries do not have sufficient cash to fund their co-investment rights at the deal closing. These co-investment rights can range from 5% up to 15% of the equity of the deals they source. Currently over 120 M&A firms source and bring co-investment opportunities to PECO. In most cases, the co-investment deals brought to PECO have already been vetted and approved through due diligence for investment by leading private equity sponsors.