Capital Bridge Memo: what separates a value-creating family-office co-investment from a value-destroying one

Co-investment has become the dominant way family offices deploy direct capital. According to the 2025 PwC/Citi study, about 69% of family-office deals are now club deals or co-investments: the family wants direct access to the asset, but rarely takes it on alone. Yet behind the same headline — "we co-invested" — hide two opposite outcomes: the co-investment that creates value and the one that destroys it. This second Capital Bridge Memo addresses the single variable that truly separates them: governance design.

The stakes are enormous

This is not a niche topic. BCG estimates that the assets of principal investors — the category that includes family offices investing on their own account — will reach roughly US$59 trillion of AUM by 2030. A growing share of that capital will flow into direct deals and co-investments. The question is no longer whether family offices co-invest, but how: with what decision architecture, what board, what alignment. That is where the difference is decided between capital that compounds and capital that erodes.

What destroys value in a co-investment

Bad outcomes rarely stem from a wrong thesis. They stem from four recurring governance defects. First: undefined decision rights. When it is unclear what is reserved to the investor and what is delegated to management, every important decision becomes a negotiation. Second: a cosmetic board. A board without real powers — or made of the wrong people — does not protect capital. This is not a detail: PwC (2025) finds that 55% of directors believe at least one peer on their own board should be replaced. If that holds for listed boards, in improvised co-investments the risk is far higher. Third: misalignment between majority capital, co-investors and management on strategy, horizon and exit. Fourth: reporting not fit for institutional scrutiny, leaving the investor in the dark until it is too late.

What creates value: governance by design

A value-creating co-investment has governance designed before closing, not patched afterwards. It defines precisely who decides what: matters reserved to the investor (budget, material capex, debt, M&A, key appointments) and matters delegated. It establishes an effective board — a few right people, with relevant expertise and real powers, not a rubber stamp. It builds documented alignment across all stakeholders on strategy, KPIs, horizon and exit mechanics. And it imposes investor-grade reporting that makes execution visible in time to act. This architecture does not slow the deal: it accelerates it, by removing ambiguity at the moments that matter.

What it means for those who deploy capital

For a family office the practical rule is one: negotiate governance with the same seriousness as price. Price sets the entry point; governance determines whether that value will hold over the years. And because most families do not have internal teams sized to design and own this architecture, the real constraint is not capital — it is governance capacity.

How I work. I support family offices as a single counterpart and a bridge to real industry: I design the governance architecture of the co-investment, structure or sit on the board, and oversee execution — aligned with the interests of those who deploy the capital. Because in a market where almost seven in ten deals are co-investments, the winner is whoever can govern them.