THE
INDEPENDENT SPONSOR MODEL
The Independent Sponsor Model
Independent sponsors are individuals or groups that seek to acquire, grow and exit one or more businesses for a profit, much like conventionally funded private equity firms. Unlike their traditional private equity counterparts, however, they don't have a dedicated pool of committed capital at their disposal and are usually required to raise capital on a deal by deal basis.
The most successful fundless or independent sponsors combine the rigor, sophistication and approach of traditional private equity investors, focusing on proprietary deal sourcing, transaction execution, portfolio company monitoring and often invest invest personal funds along-side other investors.
As the independent sponsor model has evolved and become more mainstream, it should be no surprise that many talented individuals with professional investing and operating backgrounds have started venturing out to form independent sponsor groups.
Contact us to learn more about becoming an independent sponsor.
Your Value Proposition as an Independent Sponsor
Whether you're speaking to a business owner, an investment banker representing an owner or capital provider, as the lower middle market has become more aware of independent or fundless sponsors, it's become increasingly important to be able to articulate why someone should spend their time or resources on you, an independent sponsor without a committed fund.
The business owner is generally looking for someone who takes the time to understand his/her goals and business. The investment bank wants to make sure you can secure the capital and close on the negotiated timeline and terms. The prospective capital partners want to make sure you know what you're doing and will be a good steward of their capital.
Take the time to determine
Selecting Your Investment Criteria
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Focus on industries or situations you know - where you don't have experience, bringing in an experienced industry specialist or operating partner will lend credibility
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Focus on companies large enough to attract institutional capital. For most groups, this means companies with revenue about $10 million or EBITDA above $2 million
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Qualitative
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Companies that receive strong private capital
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Selecting Your Investment Criteria
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Focus on industries or situations you know - where you don't have experience, bringing in an experienced industry specialist or operating partner will lend credibility
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Focus on companies large enough to attract institutional capital. For most groups, this means companies with revenue above $8 million or EBITDA above $2 million
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Qualitative
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Companies that receive strong private capital
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Deal Sourcing
Your network is key. Build relationships with:
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Business Brokers
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Small investment banks
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Advisors to businesses (attorneys, accountants, wealth manager, insurance professionals)
Direct outreach to business owners can uncover truly proprietary opportunities, but can also be time consuming and somewhat open ended. If you chose to go the direct route, you may want to be extremely focused around a specific industry or geography
Focusing on High Probability Situations
Looking at highly auctioned companies where the seller is purely price-motivated is usually a waste of time for an independent sponsor. Targeting specific opportunistic situations can be an effective way to find opportunities at below-market valuations.
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Opportunities from small business brokers
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Broken deals from investment banks
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Corporate spin-outs
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Situations where the owner is highly motivated
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Business owners looking for a successor and some liquidity
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Business owners looking for guidance on growth and some liquidity
What Should I Do Once I've Identified a Strong Tartget
Making an Offer
Due Diligence
Raising Capital
Post-Close
Value Creation
Value Realization
Other Frequently Asked Questions About Becoming an Independent Sponsor
Is the independent sponsor model for me?
Who makes a good independent sponsor?
Where is the best place to source new opportunities?
What works and what doesn't?
Where should I spend my time?
What are typical independent sponsor economics?
ABOUT ACCESS CAPITAL PARTNERS
Access Capital Partners is an Investment Bank Focused on Raising Debt and Equity Capital for Fundless or Independent Sponsors, Family Offices and Operating Executives.
We've Leveraged Years of Experience in Raising Capital Across a Wide Variety of Situations to Develop a Focused Effort Tailored to the Unique Needs of Independent or Fundless Sponsors.
$8.0B
In total transaction experience
100+
Completed transactions
35+
Years of middle market experience
1000+
Relationships with debt and equity capital providers
Save Time. Get Better Economics. Get More Deals Done.