As with any parallel funds managed by a manager, conflicts of interest may arise when a sponsor operates a co‑investment vehicle alongside its flagship fund. The risk is that investors or regulators may perceive the sponsor as acting more favorably toward one fund at the expense of the other. Potential conflicts can arise from the allocation of the manager’s resources, allocation of investment opportunities and preferential treatment of investors in one fund versus another. This second article in a two-part series describes the conflicts that can surface in a co‑investment context and how sponsors mitigate them, with analysis broken down across all three stages of the co‑investment process. The first article examined practical issues and questions related to co‑investments that a GP should consider both before forming its main fund and on an ongoing basis. See our two-part series on negotiating co‑investments: “Relevant Provisions in Main Fund Documents and LP Side Letters” (Sep. 14, 2021); and “Unique Features and Considerations in Co‑Investment Vehicle Documents” (Sep. 21, 2021).