Investors
Club deal instead of going it alone
Governance, waterfall, call and put rights: how several family offices share an asset without a later dispute.
Club deals work well as long as everything goes to plan. It gets interesting at the first capital call or when one partner wants out. That is what the agreement is written for.
Governance before economics
The commercial terms are usually settled quickly. Disputes arise over who decides: on a sale, a refinancing, major capex, a change of manager. We recommend a tiered catalogue — simple majority for the ordinary course, qualified majority for the three or four existential items.
A deadlock must be resolvable. Without a mechanism — expert determination, shoot-out or automatic sale after a deadline — a single partner can block the asset for years.
The capital call
The most frequent conflict. Two of three partners can and will fund, the third cannot. Without a rule you get a dispute about valuation and dilution at the worst possible moment.
What works: a pre-agreed dilution mechanic with a premium for the funding partner, combined with a time-limited buy-back right.
- Model the full waterfall including hurdle and catch-up, do not just describe it
- Tag-along and drag-along above a defined threshold
- Exit windows with a right of first refusal for co-investors
Who leads
A club deal needs a lead who decides operationally and is paid for it. Equality without leadership produces slow processes, and in acquisitions speed is the currency.
In short
The club deal agreement is written for the conflict, not the base case. Settle capital calls, deadlock and exit before you buy.
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