Co-Investment Waterfall Board Adviser

The mandate

An infrastructure manager proposes standardising co-investment terms after several deals used different preferred returns, fee offsets, sponsor catch-ups, recycling provisions and treatment of broken-deal expenses. Aggregate returns appear unchanged, yet timing and allocation outcomes vary markedly among the main fund, co-investors, excused investors and the general partner. Independent directors need to test fairness before approving the revised framework.

This adviser will translate partnership language and transaction sequences into board-level economic consequences, not design a product for distribution. Reviews will cover capital-call order, temporary funding, fee and expense allocation, priority return, catch-up, carry, tax distributions, recycling, clawback and default. Particular attention belongs on situations where the sponsor controls timing or categorisation and therefore influences who receives value.

Cadence comprises one half-day modelling challenge each month, a separate monthly session with the independent chair and attendance at six supervisory-board or limited-partner committee meetings. Written observation papers will precede decision meetings by four working days. Administrators and counsel will explain their interpretations directly; the adviser will not filter technical disagreement before it reaches directors.

The adviser has no line or executive authority, cannot amend fund documents, calculate official allocations, instruct the administrator, negotiate investor terms, solicit commitments or vote on approvals. Those duties remain with the general partner, board, administrator and counsel. The adviser may request counterfactual illustrations and flag a control weakness, but formal interpretation and implementation are excluded.

Service is appointed for ten months, followed by automatic conclusion after the framework decision and first observed allocation. A renewal of no more than two months requires independent-director approval and a new scope tied to a documented implementation question. The adviser will declare fund interests, prior manager or investor work, administrator relationships, allocation disputes and any economics linked to fundraising, transaction selection or carried interest. Each identified conflict is resolved through recorded recusal, information separation or board-approved cessation.

Why the board wants this voice

Small drafting differences can redirect substantial value while leaving fund-level returns apparently unchanged. Sponsors, lawyers and administrators each view the waterfall through a legitimate but narrower responsibility. Directors want an independent economic interpreter who can expose timing discretion, cross-subsidy and downside asymmetry before a framework becomes embedded across future co-investments.

What you will own

• Translate proposed provisions into sequenced cash waterfalls across fund, co-investor, sponsor, excused party and default scenarios.
• Test preferred-return clocks, catch-up tiers, carry bases, tax distributions, clawback and recycling under early and delayed exits.
• Examine management fee, transaction fee, broken-deal cost and shared-expense offsets for hidden cross-subsidy among vehicles.
• Challenge bridge financing, warehousing, late closers, temporary funding and allocation changes controlled by the sponsor.
• Compare outcomes when investors exercise excuse, default, transfer, dilute or enter through parallel and alternative vehicles.
• Identify calculations, notices, approvals, reconciliations and independent checks required before the administrator releases distributions.
• Give directors scenario papers that separate contractual interpretation, economic effect, governance discretion and unresolved fairness questions.

Candidate qualifications

• Advised independent fund boards on private-equity or infrastructure co-investment waterfalls across multiple parallel vehicles.
• Modelled preferred returns, sponsor catch-up, carried interest, clawback, recycling and tax distributions through actual cash sequences.
• Detected fee or expense allocations that produced unintended cross-subsidy despite plausible aggregate fund reporting.
• Worked constructively with partnership counsel and administrators while preserving the board’s independent economic challenge.
• Understood excuse, default, transfer, warehousing and bridge arrangements and their consequences for investor equality.
• Remained free from fundraising incentives, placement economics, carried-interest participation and official allocation responsibility.

Non-negotiables

• Can attend all six Warsaw, Luxembourg, Frankfurt or London governance sessions during the ten-month term.
• Will declare holdings and relationships involving the manager, funds, investors, administrator, depositary, counsel and placement agents.
• Brings co-investment waterfall judgment across live allocations; high-level private-fund strategy alone is inadequate.
• Accepts no power to interpret documents officially, instruct calculations, negotiate terms, solicit capital or approve distributions.

1. 49 words maximum. Describe a waterfall term whose timing redirected value without changing headline fund return.
2. 49 words maximum. How would you expose cross-subsidy between a main fund and co-investment vehicle?
3. 49 words maximum. Identify any carried interest, fund holding or manager relationship relevant to your independence.