B2B Services Deals: Co-Investment Rights Done Right
Negotiating Co-Investment Rights on B2B services deals, with the structure protection and capital connectivity an independent sponsor actually needs.
An independent sponsor closing B2B services transactions in the $8M to $90M EV range has a defined set of moves at the Co-Investment Rights stage. Most of them are not in a generic M&A textbook.
The typical B2B services platform sits at $8M to $90M EV with EBITDA in the $2M to $18M range. The thesis runs on recurring revenue service platform with bolt-on operators. Most B2B services deals look better in the CIM than in the data room. Skip the CIM, ask for the contracts.
How Co-Investment Rights actually gets structured.
Define co-invest rights pro-rata to the LP's deal commitment.
Build a 30-day decision window so the deal does not stall.
Limit co-invest fees and carry, if any, to reflect the relationship value.
Document the right in the LPA, not in a side letter.
In B2B services, layer in MSA assignability mapped customer-by-customer as part of the Co-Investment Rights workstream.
Granting unlimited co-invest. The next LP finds out and your firm economics suffer.
"Co-investment is a privilege you give to the LPs you want to keep. Define it accordingly."Jason Powell · Co-Investment Rights
The deal is one thing. The capital that opens up after close is another.
Capital after close is where the IRR actually gets made. The right introductions at month nine through month thirty are where this practice works as hard as it does at the LOI.
Related deal pages.
LOI Negotiation for B2B Services
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Independent Sponsor Economics for B2B Services
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for B2B Services
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for B2B Services
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Co-Investment Rights for Healthcare Services
roll-up of physician practices and ancillary service lines
Co-Investment Rights for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
Co-Investment Rights for B2B Services, on independent sponsor terms.
Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.