815 independent sponsor (“IS”) deals analyzed: IS deals have a similar risk profile to traditional PE deals, with greater upside.
The deals: 68% were $10 million - $50 million TEV, 73% had $2 million - $10 million of EBITDA, and 69% were in business/consumer products & services.
Median performance (net of fees to the IS): 2.1x MOIC and 23.8% IRR. On average, these IS deals outperformed the benchmark of matched non-IS PE deals (same vintage, similar size): excess MOIC of +0.8x, excess IRR of +11.4%.
5% of investments were total losses, while almost a quarter of investments returned above a 4x MOIC.
The median deal saw employee count grow by 17% and achieved 2.6x EBITDA multiple expansion from entry to exit.
The downside risk was NOT higher for IS deals. Loss rates were statistically the same as the benchmark. Outperformance in IS deals is "driven by higher positive returns instead of less downside risk."
Thanks to Griffin Horter for his highlights on X.
