EQ is the most important trait
Soft skills are the most important for an independent sponsor, according to Kevin Wong at Lang Partners, a Dallas-based Family
Scale
16 posts
Make 25 intros each week
World-class networker shared that one of his KPIs was to make 25 introductions each week. “If you provide valuable intros,
$50m Rollup vs. $2.5m LBO
Just met a first-time searcher with a $2.5m deal under LOI at below 4x. Option A: The Standard LMM
Avoid $2m EBITDA deals
A $2m EBITDA deal is treacherous. At 5x, it's $10m EV. If you double EBITDA, which is a
30% IRR is the right benchmark
Robert Graham, based in Dallas, graduated from HBS in 2018 and acquired his first company the year after as a
Include the wives
Include spouses in your reporting, especially with retail investors. Most of our investors at Minds Capital are HNWIs, predominantly males.
How to unwind a dead deal
How to unwind a dead deal: • Maintain a good relationship with the seller (unless they screwed you). They might come
Benefits of no cross-collateralization
“What is really attractive about the independent sponsor model is not having investments cross-collateralized,” says Nathan Chandrasekaran. A PE Fund
IS ecosystem is collaborative
The independent sponsor & search spaces are often characterized as collaborative, as opposed to the sharp elbow reputation of high
Sell now vs. Hold longer
2 years in, a strategic offers 2x MOIC and 41% IRR. Do you sell? Yes, said Sarkaw Aziz, who exited
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
Zone-Skipping EBITDA
Zone-skipping is a foundational principle in lower-middle market PE. Scaling EBITDA into the next zone unlocks higher valuation multiples by
PE fund vs. Deal-by-deal?
"How do you make more money; by raising a PE fund or doing it deal-by-deal as an independent sponsor?
The Perfect Independent Sponsor
What does the perfect independent sponsor look like? • A sizeable team, ideally 3-6 senior partners. • Multiple deals in the portfolio
Expand Multiple
For outsized equity returns, you need to expand the multiple. How? (1) Buy cheap. Proprietary sourcing or asymmetric insights can
Ass-Sitting is Tax-Efficient
“Sitting on your ass is tax-efficient.” - Charlie Munger Long hold periods = tax-efficient If you own two consecutive investments making
