Joint ventures and co-investments: aligning partners from term sheet to exit

Corvus Management · As at June 2026

More capital now goes in deal by deal. Family offices and mid-market principals like joint ventures and co-investments for their longer horizons and flexibility compared with fund mandates, and because they tie capital to the operators running the assets.¹ Large investors also invest directly alongside sponsors, and separate accounts and multi-deal co-investment vehicles are growing.² In hotels, L Catterton Real Estate and Cedar Capital Partners bought two European hotels through a joint venture in April,³ and Griffin Capital Partners and Primestar Group launched Prime Griffin Hotels in June, a 50/50 platform to buy, develop and reposition hotels in Poland.⁴

Why partners choose a joint venture

The capital partner gets control over each investment, a local operator and a holding period set by the asset, not by a fund's life. The operator gets capital without handing over its strategy, plus a share of the upside through a promote. Both can set risk asset by asset. That flexibility is also where most disputes start, because everything a fund agreement would standardise has to be negotiated.

Who decides

The operator usually runs the business day to day, while the big decisions need both partners: business plan and budget, new debt, capex above a threshold, disposals and related-party contracts. The list has to be precise enough to protect the minority without freezing the business.

Money in, money out

The agreement should say how extra capital is called, how fast it must be paid, and what happens if a partner does not pay: dilution, a shareholder loan at a penalty rate, or lost rights. Without that, a cash need turns into a negotiation at the worst moment.

Distributions usually return capital first, then pay a preferred return, then split the rest with a promote to the operator above one or more hurdles. The definitions count as much as the percentages: how fees, reserves and refinancing proceeds are treated, and whether the promote is measured asset by asset or across the portfolio.

When partners disagree

A 50/50 partnership needs a way out of deadlock: escalation to senior executives, mediation or expert determination, and as a last resort a buy-sell clause, where one partner names a price and the other decides to buy or sell. That clause favours whoever has more cash, which is worth weighing before signing.

Lock-ups, rights of first offer or refusal, tag-along and drag-along rights, and change-of-control terms decide whether a partner can sell its stake, and to whom. They protect each side from an unwanted new partner, and can also make a stake very hard to sell.

Getting out

The agreement should plan the end: a sale of the asset, a sale of one partner's stake, a refinancing that returns capital, or a recapitalisation with a new investor. Continuation vehicles accounted for about 14% of sponsor-backed exit value in 2025, up from 5% in 2021, a sign that exits increasingly reshape ownership instead of selling the asset outright.⁵

Where it usually goes wrong, and what to prepare

The usual mistakes: signing the acquisition before the shareholders' agreement is settled, leaving budget approval undefined, underestimating the reporting a capital partner will want, and agreeing a deadlock clause neither side could actually use. Before any asset is committed, partners need a term sheet covering governance, capital calls, the waterfall, deadlock, transfers and exit, an agreed business plan and first budget, a reporting format that suits both, and an outside view of the operator's fees and promote against current market practice.

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How we help

Corvus Management advises investors, family offices and operators on joint ventures, co-investments and platform structures. We help select the right partner, negotiate the economics and governance, coordinate counsel on the shareholders' agreement and, where needed, arrange the financing that sits alongside it.

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