Co-syndicating a deal means that both syndicates are investing in the company and backing the investment by each investing & sharing it with their LPs.
Best practices:
One syndicate takes the lead in writing the deal note, once both are happy with it, the same deal note is shared to both groups of LPs
Launch the deal at the same time
Host and share just one investor Q&A session with both groups of LPs
Options to split carry (assuming full 15% carry is taken):
50/50
7.5% each (assuming full 15% carry is taken)
set & agreed ahead of time
Weighted to the deal sourcer & memo writer
10% to the lead who sourced the deal and writes the memo for it
5% for the lead who did not source the deal or conduct the preparation, but shares it with their LPs
set & agreed ahead of time
Weighted to the ratio of amount invested from each lead (most complicated)
For example if Syndicate A’s LPs invest $150k of the $200k allocation, and Syndicate B’s LPs invest $50k, then the split would be 11.25% carry for A & 3.75% carry for B
Any investors who are part of both, the carry would be split evenly
Lead agree to set the split after all investments have been made
Weighted to the ratio of LPs in each syndicate
For example if Syndicate A has 100 LPs and Syndicate B has 50, then A would get 10% carry, and B would get 5% carry