Independent sponsor incentives are cleaner
Independent sponsor incentives are cleaner, more sustainable, and more aligned than those of traditional searchers. A traditional search deal that&
Scale
20 posts
Cost of a full deal team
$1.0-1.5m per year is the cost of a fully staffed deal team at a PE fund, excluding
Acquire HoldCo Infrastructure
Large-cap PE funds build massive centralized "ops" teams to support the portfolio. Independent sponsors can't
Transitioning to the next generation (GP)
Transition Capital Partners is a mainstay in Dallas private equity. Jason Faucett and his team are the 4th generation of
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
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
$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
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
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,
Zone-Skipping EBITDA
Zone-skipping is a foundational principle in lower-middle market PE. Scaling EBITDA into the next zone unlocks higher valuation
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
The Perfect Independent Sponsor
What does the perfect independent sponsor look like? • A sizeable team, ideally 3-6 senior partners. • Multiple deals in the
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
