The Club Deal FAQ serves as a vital knowledge repository for investors seeking agency and transparency beyond traditional blind-pool funds. This section addresses the technical “how-to” of direct investing, clarifying the roles of independent sponsors, the specifics of SPV governance, and the nuances of fee structures like management and performance fees.
Designed for Family Offices and HNWIs, these FAQs bridge the gap between complex legal theory and actionable investment operations. By tackling critical topics from AML compliance to portfolio diversification strategies, the FAQ ensures that every syndicate participant operates with professional-grade intelligence.
Clubdeal.com is the definitive, information-only intelligence hub for professional investors in the club deal and co-investment space.
It aggregates curated news, structured analytics, and practical execution tools across private equity, real estate, credit, and infrastructure. Unlike a marketplace, it doesn’t list deals to buy; instead, it provides the essential context—market trends, terminology, structures, and benchmarks—that family offices, institutions, and sponsors need to navigate the deal-by-deal landscape with confidence and efficiency.
No. We are strictly a neutral information and education platform.
We do not arrange transactions, introduce investors to sponsors, provide investment advice, or take transaction-based fees. We do not hold client funds or securities. Our mission is to arm you with the knowledge and frameworks to execute your own deals better, not to act as an intermediary in them.
The platform serves the entire professional deal-by-deal ecosystem.
- Allocators: Single and Multi-Family Offices (SFO/MFO), Sovereign Wealth Funds (SWF), Institutional LPs, and experienced High Net Worth Individuals (HNWI) building direct portfolios.
- Dealmakers: Independent Sponsors, GPs, and Fundless Sponsors seeking best practices and market norms.
- Advisors: Legal, tax, and diligence professionals who support these transactions.
Our model is transparent and aligned with our neutrality. We monetize through:
- Subscriptions: Premium access to deep-dive analytics, archives, and advanced tools.
- Sponsorships: Curated partnerships with service providers (e.g., law firms, fund admins) for educational content and brand visibility.
- Listings (Future): Paid directory placements for verified service providers or sponsors (non-transactional).
This ensures our content remains objective and free from the conflicts of commission-based models.
Yes. We adhere to strict data privacy and security standards. As an information platform, we do not require you to upload sensitive deal documents or personal financial data to use our core news and educational features. Any user profile data or preferences you save (e.g., for newsletter customization) is protected and never sold to third parties for solicitation purposes.
Our editorial team, supported by industry advisors, filters the daily noise to find high-signal intelligence relevant to institutional-grade co-investing. We focus on:
- Key Asset Classes: Private Equity, Real Estate, Private Credit, Infrastructure, Secondaries.
- Institutional Focus: We prioritize deals, trends, and structures relevant to professional allocators, filtering out retail-level crowdfunding or unvetted noise.
- Context: Every headline includes a brief “Why it matters” note to save you time.
We welcome insights from experienced market participants.
If you are a CIO, Sponsor, or subject-matter expert (legal, tax, ops) with a case study, white paper, or perspective to share, please reach out via our Contact page under the “Contribute Content” subject line. We look for educational value—practical lessons, structural innovations, or market analysis—rather than promotional pitches.
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Daily: Scan the Briefs for market moves and new deal structures.
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Weekly: Use the Analytics section to benchmark terms you see in your own deal flow.
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Deal-Time: When evaluating a live opportunity, use our Tools (checklists, glossary, 101s) to pressure-test the structure and governance.
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Strategy: Use our Playbooks to refine your internal direct investing processes and team capabilities.
Use Clubdeal.com as a mirror for what sophisticated investors expect.
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Benchmark: Check our data on fee structures and governance terms to ensure your proposals are market-standard.
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Educate: Share our 101s and Glossary links with prospective family office partners to align on terminology and speed up closing.
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Positioning: Ensure your own materials reflect the “Institutional Quality” standards highlighted in our guides.
While we are starting with essential intelligence, our roadmap includes advanced utilities to further reduce friction.
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AI: Developing tools to parse deal documents and automatically flag non-standard terms or risks.
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Blockchain: Building a repository feature to provide immutable provenance and version control for deal documents, enhancing trust without acting as a custodian.
These features will be rolled out carefully to ensure they add genuine value and security.
A club deal is a syndicated investment where a small group of investors pools capital to acquire a single specific asset (a company, property, or project).
Unlike a blind-pool fund—where you commit capital for 10 years without knowing what the manager will buy—a club deal lets you see the asset, the price, and the business plan before you invest. It offers precision and control, whereas a fund offers diversification and delegation.
While related, they differ in origin.
A co-investment is typically a sidecar allocation offered by a large GP alongside their main fund (e.g., Blackstone invites a pension fund to put extra money into one huge deal).
A club deal is often originated deal-by-deal by an independent sponsor or a lead family office, specifically for a syndicate of partners, without necessarily having a main “fund” behind it.
Investors want three things that funds often lack:
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Control: The ability to say “no” to specific deals.
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Fee Efficiency: Avoiding the “double layer” of fees (fund + underlying) and often paying lower fees on direct deals.
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Transparency: Seeing exactly where their money is going and interacting directly with the asset or operator.
It marks a shift from passive allocation to active ownership.
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Investors: Single Family Offices (SFOs) looking for sector fits, Multi-Family Offices (MFOs) aggregating client demand, and HNWIs who are “Qualified Purchasers.”
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Sponsors: Independent (Fundless) Sponsors who are experts in a niche, Emerging Managers building a track record, or even other Family Offices acting as the “Lead” investor for their peers.
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Concentration: You lose the safety net of a diversified portfolio; if the single asset fails, you can lose 100% of that check.
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Execution Risk: Independent sponsors may lack the deep back-office teams of mega-funds to handle crises.
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Dead Deal Costs: If a deal falls apart during diligence, the potential investors might still be on the hook for legal and audit bills.
They mirror PE funds but are deal-specific:
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Management Fee: Often lower (e.g., 1.0% – 1.5%) or fixed as a monitoring fee.
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Performance Fee (Promote): Typically 20% of profits, but only after investors hit a Hurdle Rate (e.g., 8%).
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Deal Fee: A one-time closing fee (1-2% of deal value) paid to the sponsor for arranging the transaction.
An independent sponsor (or “fundless sponsor”) is a dealmaker who finds and manages acquisitions but raises the equity capital deal-by-deal rather than from a committed fund.
Their role is to source the target, negotiate the price, secure the debt, perform diligence, and then operate the asset—just like a private equity firm, but with a bespoke syndicate of investors for each transaction.
- Private Equity: Buyouts of lower-middle-market family businesses ($10M-$50M EBITDA).
- Private Credit: Direct lending syndicates for specific corporate borrowers.
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Real Estate: Single properties (hotels, logistics, multifamily) are the most common entry point.
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Infrastructure: Renewable energy projects or tangible assets that generate yield.
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Venture/Growth: Late-stage rounds for specific tech companies.
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Selectivity: You build a portfolio that matches your convictions, not a manager’s general mandate.
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Cost: Over time, a portfolio of direct deals often carries a lower “fee drag” than a fund-of-funds or high-fee PE structure.
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Time Horizon: Club deals can often hold assets longer (or shorter) than the rigid 10-year clock of a traditional PE fund.
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Workload: You are responsible for the final “Yes/No.” You need to read the materials, understand the risks, and handle the paperwork.
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Access: The best deals are competitive; unlike a fund where you “subscribe and forget,” you have to fight for allocation in top club deals.
Start with trusted channels: existing GPs, independent sponsors with relevant track records, and peer family offices rather than cold inbound.
Filter opportunities quickly using 3 lenses: sponsor quality, asset quality, and structure (fees, governance, downside). Use a simple “first‑screen” checklist to decide in 60 minutes whether to pass, park, or proceed to full diligence.
Focus on 4 buckets:
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Track record: “Show me three prior deals, your role, and realized outcomes.”
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Alignment: “How much of your own cash is in this deal, and how are fees reinvested?”
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Infrastructure: “Who runs finance, legal, and reporting?”
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Governance: “What rights do investors have on exits, leverage, and key hires/fires?”
Stages usually run: initial screen → non‑binding term sheet/LOI → deep dive diligence (commercial, financial, legal, tax, ESG/operations) → confirmatory work and financing → final docs and closing.
For smaller FOs, partnering with specialist advisors for commercial and legal DD is common; internal teams focus on thesis, risk appetite, and governance fit.
Prioritise:
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Economics: hurdle, catch‑up, promote %, and fee offsets.
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Governance: board representation, reserved matters, information rights.
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Minority protections: tag‑along, pre‑emptive rights, anti‑dilution, transfer restrictions.
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Key‑person and removal mechanisms for the sponsor in case of misconduct or non‑performance.
Negotiate at least one board seat or observer right for significant tickets and define “major decisions” (sale, leverage, large capex, related‑party deals) requiring investor consent. Set clear information rights: frequency and content of reporting, budget approvals, and access to management. Co‑investor agreements can formalise how LPs coordinate votes and resolve disputes.
Insist on robust tag‑along rights, pre‑emptive rights on new issuances, and fair drag‑along mechanics tied to minimum valuation and majority thresholds.
Use supermajority consent for key decisions and ensure alignment on exit horizon and leverage policy. In some cases, a preferred equity layer with priority distributions can further protect downside.
Common pitfalls: over‑concentration in the first few “exciting” deals, under‑investing in diligence and legal work, and partnering with sponsors whose incentives are fee‑heavy and capital‑light.
Many also underestimate the ongoing monitoring burden and fail to document an internal playbook—what is acceptable on fees, governance, and risk.
Treat each club deal like its own mini‑fund and set hard limits per deal (e.g., 2–5% of total portfolio, depending on risk).
Diversify by sector, strategy (value‑add vs core), geography, and sponsor, and pace commitments across vintages to avoid clustering risk. Use look‑through analytics to understand aggregate leverage and sector exposure.
At minimum: quarterly financials and KPIs, an annual budget and business‑plan review, and participation in key board or investor meetings.
For operationally intensive deals, expect more frequent calls early on (first 12–18 months). Family offices often dedicate an investment professional or external adviser as the “deal captain” for each significant position.
Common exit routes: trade sale, secondary sale to another financial sponsor, dividend recap, or, rarely, IPO.
Your rights depend on documentation: drag‑along provisions allow majority holders to force a sale under agreed conditions; tag‑along rights let you participate on the same terms. Supermajority thresholds and valuation floors can prevent being dragged into an unattractive exit.
Yes, almost always. Club deals are private placements exempt from public registration (e.g., Reg D in the US), meaning they are legally restricted to sophisticated investors.
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Accredited Investor: ~$1M+ net worth or $200k+ income.
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Qualified Purchaser (QP): $5M+ in investments (individuals) or $25M+ (entities).
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Why it matters: Many top-tier club deals require “QP” status to avoid capping the number of investors at 99.
KYC is a mandatory legal process to prevent fraud and identity theft. Before you can wire money, the sponsor (and their bank) must prove you are who you say you are.
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What to expect: You will need to provide a certified passport copy, a utility bill (proof of address), and sometimes a “source of funds” declaration. It’s not the sponsor being difficult; it’s the law.
AML regulations require sponsors to ensure investment funds don’t come from criminal activities.
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The check: You may be asked: “Where did this money come from?” (e.g., sale of a business, inheritance, savings).
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The impact: If you invest via a complex offshore trust or shell company, expect enhanced due diligence, where you must unmask the “Ultimate Beneficial Owner” (UBO) to prove the funds are clean.
Technically, no. The sponsor manages the asset, but the securities (your shares in the SPV) are recorded in the company books, and the cash sits in a dedicated bank account for that SPV.
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Best Practice: Never wire money to a sponsor’s personal account. Always wire to an account named after the specific entity, e.g., “Project Blue Sky Holdings, LLC.”
In the US, independent sponsors often rely on the “issuer exemption” to raise capital without being a broker-dealer.
However, they cannot receive “transaction-based compensation” (a commission) for raising the money unless they use a licensed placement agent.
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Red Flag: If a sponsor takes a “success fee” strictly for raising capital (not for managing the deal) without a license, the entire deal could be legally rescinded.
Conflicts are common (e.g., the sponsor owns the building next door, or hires their own service company).
Usually, yes, investors’ identities are kept confidential from other investors in a club deal, but with exceptions for some jurisdictions:
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The Norm: You are listed in the schedule of partners, but this document is private.
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The Risk: In some jurisdictions (like the UK’s Companies House), “Persons with Significant Control” (>25% ownership) are public record. Ask the sponsor before you sign if your name will appear on any public registry.
Club deals are typically pass-through entities (partnerships). You don’t pay tax at the deal level; you pay it on your personal return.
- The Form: In the US, you receive a Schedule K-1 annually.
- The Timing: K-1s often arrive late (March/April), meaning you may need to file an extension for your personal taxes. This is a standard friction of private investing.
Unlike public stocks, there is no SEC watchdog watching daily trades. Your protection is the legal contract (LPA) and banking controls.
- Key Control: “Dual Authorization” on bank wires (requiring two people to sign off on money moving out) is the gold standard.
- Audit: For larger deals, insist on an annual audit by a third-party accounting firm to verify the numbers match the bank balance.
The answer really depends on your jurisdiction.
You could, via a “Self-Directed IRA” (SDIRA). However, strict rules apply.
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UBTI Tax: If the club deal uses debt (leverage), your IRA might owe “Unrelated Business Taxable Income” (UBTI) tax.
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Prohibited Transactions: You cannot invest in a deal where you or your family already control the asset. Always check with your tax advisor first.
