Placement agents help independent sponsors raise debt and/or equity, but at a cost.
If the deal is cheap, it should sell itself. If the deal isn’t cheap: congrats, now you've just added even more cost.
The agents typically charge 5-8%** of the raise, a cost carried by the investors. They may get the job done, but it doesn't scream strength. If you hired one after a prolonged period of failing to raise the capital, then it smells even worse. So, if you're going to use one, make sure to hire them on Day 1.
Counter points (which are very valid!) would be that placement agents:
(a) help you focus on the seller relationship, diligence items, and deal process,
(b) provide access to new and/or strategic capital partners, and,
(c) increase the likelihood of closing (which is, of course, all-important).
**CORRECTION: 5-8% is probably too high, maybe correct for very small deals. 1-3% is more common for $20-100m independent sponsor raises.
