The case for using the independent sponsor model

Independent sponsors offer new opportunities for family offices, mezzanine financiers, high net worth individuals, and private investors who want to align better rewards with the most efficient private equity structure. There are several independent sponsors currently in the private equity marketplace who have found it easier to source top deals because of the new challenges associated with private financing placements and business brokers.

A lack of trust exists today between business brokers and business owners about what is available in the private equity marketplace. While some investors have successfully worked with independent sponsors to provide funding to small and mid-size companies, many find it challenging to understand the rewards they stand to gain in working with an excellent independent sponsor. There are currently endless opportunities for independent sponsors to find business owners that are looking for capital partners. For instance, independent sponsors offer a variety of options to private placements participants.

Post-transaction: Weadd value to businesses by introducing new technology to increase competitiveness and designing employee incentive structures to align company goals with all stakeholders.

According to the US SBA: $10 trillion worth of assets held in more than 12 million privately-owned companies will likely change hands in the next 10-15 years.

Intense competition: Ubiquitous ultra-cheap debt, and record levels of dry powder in investment funds worldwide, asset prices are being bid up in a low-yield environment. 

The perfect time: For family offices and high net worth individuals to transition from traditional private equity to the more contemporaneous and potentially more lucrative independent sponsor model.

Leave a Reply