Co‑investments come with certain challenges and risks, including the potential to inhibit a GP’s ability to close deals, exit investments or maximize value for investors in its main PE fund. GPs may lack the negotiating leverage to avoid those issues, however, as LPs in co‑investments seek increasing amounts of control and access. That is particularly the case when an LP is an anchor investor in a sponsor’s main PE fund or where a sponsor has a limited track record. In those contexts, GPs have several options for structuring their co‑investment programs to meet LP desires while potentially protecting their own interests. This two-part series describes common co‑investment structures and the factors a fund sponsor must consider when deciding which approach to offer its LPs. This second article outlines direct and indirect co‑investment structures that afford LPs more discretion on which investment opportunities they will pursue or bypass. The first article addressed longer-term structures GPs can use to pursue several co‑investment opportunities, including to give the sponsor more control over LPs’ co‑investment commitments. See “Sadis & Goldberg Seminar Highlights the Ample Fundraising and Co‑Investment Opportunities in the Private Equity Industry, Along With Attendant Deal Flow and Fee Structure Issues” (Dec. 8, 2016).