When independent sponsors break up 💔
The flexibility of the deal-by-deal model also manifests in break-ups. 💔 Traditional partnerships tie up equity, control, roles, and obligations in
SBICs & Warrants
SBICs & Warrants: SBICs usually invest 10-25% of their funds as equity alongside their core product which is mezz debt,
The cost of capital placement agents
Placement agents help independent sponsors raise debt and/or equity, but at a cost. If the deal is cheap, it
When to hire a capital placement agent
The 3 situations where independent sponsors should consider engaging a capital placement agent to help with the fundraise: #1: First
Estimated deal expenses for independent sponsors
Deal expenses: • Legal: $100-300k • QoE: $20-70k • Misc.: <$100k • R&W insurance: ~1% (uncommon) • Closing fee: 1-2% of EV
Underwriting key people risk
Key people risk is especially difficult to underwrite if: (i) The founder controls the revenue (relationship-based, project-oriented, etc.). (ii) The
"Strategic generosity" to build trust
Examples of strategic generosity as a way to build long-term value & trust: • Yield on GP terms if capital partner
Bankers as Free Advisors
Industry-leading investment bankers can be your best advisor - for free. Ping them once you're under LOI. Bankers
The Big Beautiful Bill
The Big Beautiful Bill just passed. The two biggest and most beautiful takeaways for private equity: 1. Carried interest = No
ESOP is complex
From a friend who recently acquired an ESOP business: "Not sure I would recommend it." "It took
Pushed Out by Anchor Investor
How to minimize the risk of predatory capital providers stealing your deal: • Include non-circumvention provision in NDA. • Own the relationship
Specificity is key
I just read a deck where the sponsor suggested 4 avenues for growth: • Ride macro opportunities • Expand geographically • Add service
Investor Reporting as a Differentiator
Reporting is an area where independent sponsors can differentiate and excel, and it is the best way to build strong,
Faustian bargain in PE
Faustian Bargain in PE: when a fund sacrifices flexibility to pursue their favorite deals in exchange for committed capital. La
Board mtg length vs. EBITDA growth
There's an inverse relationship between the length of a board meeting and EBITDA growth.
$1m equity = Biggest pain
$1m = pain in the ass equity check size for independent sponsors Too small for institutions Too big for HNWIs "
70% cost savings w/ remote work
Competitive edge: 70% cost savings by mastering remote work. An expert on hiring & managing an offshore workforce, Nick Huber&
PG vs. Conventional lenders
I recently chatted with a top-class searcher who was under LOI and contemplating conventional lenders vs. SBA loans. As I
LOI best practices
LOI best practices: • Include baseline financials for the target company and explicitly state that your valuation is based on this
Get in the arena
"You miss a 100% of the shots you don't take" is a quote by legend Wayne
The Value of Quick No's
“A quick no is the second best answer,” said an independent sponsor when chatting with prospective investors. It’s so
Tack Excess Cash onto EV in Stock Purchase
In a stock purchase, tack the available cash of the business onto the purchase price and ask the seller to
The Best Way To Start As An IS
The best way to start as an independent sponsor is when your (PE or FO) employer doesn't want
PE Funds Aren't More Likely To Close
A seller may think a PE fund with committed capital is more likely to close than an IS. I disagree.
