Guides · Co-GP and joint venture deals

How to Structure a Co-GP Partnership

Most co-GP deals stall because the partners never agreed on who does what. I see it often. Two people share a deal, each assumes the other will handle the hard part, and momentum fades. When your team and partners feel you are not getting anywhere, you can lose their trust as a leader.

A co-GP structure fixes that when it is set up with care. In a traditional deal, one general partner finds the deal, structures it and runs it, and limited partners typically invest in a more passive role. In a co-GP deal, you bring one or two other parties in at the management level. Here is how I would structure it.

The steps

Step 1. Name your real bottleneck

Start with what is slowing you down. For some people it is access to deal flow. For others it is access to investors, or a skill gap. You might be great at development, negotiating operating businesses, lining up financing or running a company after it is acquired. You might not want to deal with the capital raising or the structuring. Write down the one bottleneck that stops you from closing more deals. That tells you what kind of co-GP partner you need and what you should hand off. Without this step, you end up picking partners because you like them, not because they fill a gap.

Step 2. Find complementary skill sets

A joint venture is about finding parties whose skills complement yours. If you are the deal finder, look for someone with investor access. If you raise capital well, look for someone who can run the asset. The deal itself can be small or large. You might be buying one operating business, a portfolio of real estate, or raising capital for something else. The term you use matters less than the fit. Do not partner with someone who has the same strengths you do. You want a partner who can do what you cannot, or do not want to do.

Step 3. Define each partner's role

In a co-GP deal, the added parties join at the management level of the deal. That role can be very limited or very broad and open. Decide which before you talk numbers. Write down who sources the deal, who structures it, who raises the capital and who runs the asset after closing. Each person should know what they own and what they do not. Keep the list short and specific. Vague roles are where partnerships break down, and fixing them later costs more than settling them now.

Step 4. Customize the split

Sometimes a co-GP deal is a 50/50 partnership right down the middle. Many times it has to be customized to what each partner is contributing and what is needed on that deal to be successful. So do not start from an even split out of habit. Ask what each party puts in, whether that is capital, time, access or operating work. Then set the economics to match. Remember that general partners often put some of their own capital on the line and may take on more risk. Reflect that in how you divide the upside, and many sponsors talk to a securities attorney about how to structure it.

Step 5. Define the field and scope

Kevin shared a negotiating point from his joint ventures. Define the field. When you give someone a license or a partnership, spell out exactly what it covers. His example was simple. If they only work in two countries, do not give them five countries. The same thinking applies to a co-GP. Be clear about which deal, asset or area each partner is involved in. A clear boundary protects both sides and keeps small disagreements from turning into big ones.

Step 6. Keep fees simple

In our capital raising workshops, we talk about being focused, removing friction and not having nine types of fees. In some cases the economics are more performance-based. That applies directly to a co-GP. The more layers of fees you stack, the harder it is for investors and partners to understand the deal. Pick a small number of clear economic terms. Tie as much as you can to results. A simple structure is easier to explain to investors, and it is easier to keep your partners aligned.

Step 7. Source partners where they gather

You do not have to find co-GP partners cold. At Family Office Club, members can get a listing in our blue pages, which works like a yellow pages for members. You can also watch who speaks or sponsors at our webinars and discussion panels. Look through our 50-plus recorded events and see who sat on stage or who structures co-GP deals regularly. Then approach them. The same ideas we teach for attracting investors apply to attracting co-GP partners.

From my talks

From my books and event talks

One point I repeat to every partner I work with is that structure can make or break a deal. Many times, deal structure matters just as much as the strategy. Usually the team matters even more, but the structure matters a ton. I have seen a good deal ruined by a bad structure, and I have seen an average deal turn excellent because it was structured well. So when you and your co-GP partner sit down, give the structure the same attention you give the asset. Spend the time on it before you bring in a single investor.

Where people go wrong

• Partnering with someone who has the same strengths you do instead of someone who fills your gap.
• Defaulting to a 50/50 split without looking at what each partner actually contributes.
• Leaving roles vague so nobody knows who sources, raises, structures or runs the deal.
• Giving a partner a broader scope than they can work, such as extra markets or assets they will not cover.
• Stacking many types of fees so the deal gets hard to explain to investors and partners.

Facts from this talk

• In a co-GP deal, the extra partners can join in a very limited way or a very broad and open way, depending on the deal.
• Family Office Club has more than 50 recorded events and webinars, and members can see who spoke or sponsored to find co-GP partners.
• Kevin said he licensed a product to 80 countries and that it ended up in 40% of all skincare products in the world.

General education only. Not legal, tax or investment advice.

Talk to a securities attorney to explore options around co-GP agreement terms, partner liability exposure and fee and profit splits. Do not use AI to write your own legal agreements.

Questions about this guide

Related questions

• How do I find a joint venture equity partner?Start by naming your bottleneck, whether that is deal flow, investor access or deal setup.
• How do I structure a JV between a sponsor and capital partner?Start with who does what.
• How should I split ownership with a money partner?Start with a preferred return for the money partner, then split the back end profit.
• What is a co-GP in real estate?A co-GP in real estate is a second party who shares the management of a deal with the main general partner.

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