Back-bencher to all-star: Growth of independent sponsor model

It has won respect in the private equity world

By Adam Connatser

About a decade ago, most people generally hadn’t heard of independent sponsors. Even among professionals in private equity, M&A, and finance, many were aware of the concept, but mostly regarded independent sponsors as somewhat lesser-than. They viewed it as PE-lite — made up of deals and the folks behind them who didn’t cut it for whatever reason.

How times have changed! Now the independent sponsor model is often preferred by PE investors over the more traditional committed capital structure. With this structure, the independent sponsor often sources the deal and structures initial terms first, and then finds the right partner to invest in that deal.

As a business lawyer, I have a personal history with this. A decade or so ago, ISs only competed for the smallest of M&A deals, and even then didn’t compete very well. Sellers and bankers were very concerned about the ability to raise capital on short notice, so most deals went to committed capital funds.

But there has been a gradual acceptance of the model as ISs have proven time and again over the years their ability to get deals done. After all, results speak volumes. The model’s more flexible economics and frequent ability to source niche deals have even made it the most attractive option to many PE investors.

Several of our institutional clients, including large diversified asset management firms, are actively seeking high-quality independent sponsors to diversify their portfolios and take advantage of opportunities in the headwinds of the current market.

In recent years, our IS clients have won, closed, successfully managed and exited deals well into the nine-figure range.

Wright Connatser is honored to help our clients – sponsors, investors, entrepreneurs, innovators, and world-changers – do what they do. We invite you to join us in harnessing the power of the independent sponsor model, and private investment generally, to shake things up.

“Capital is to the progress of society what gas is to a car.”

  • James Truslow Adams

American writer and historian who popularized the term “The American Dream”

Editor’s note: For more information about the firm’s private equity work, contact Adam Connatser at Adam@wrightconnatser.com.