As an independent sponsor, how involved are you? ($3-5M EBITDA range)

searcher profile

March 03, 2025

by a searcher in Montreal, QC, Canada

Hearing a lot of different opinions on the level of involvement for sponsors that acquire companies in the lower mid market.

Say you target companies in the $3-5M EBITDA range, what is the typical role of a sponsor? Are they working mainly ON the business, or are they tied down working IN the business?

Any personal experience you can share, or stories about your network? What are your key responsibilities as a sponsor to drive real value creation and growth in the business?

0
9
207
Replies
9
commentor profile
Reply by a searcher
from University of Pennsylvania in Miami, FL, USA
Traditionally, an independent sponsor plays the role of a PE firm. They are the "sponsor" of the deal - independent = without capital. Assuming no challenges in the business, traditional PE generally has involvement @ Board level, approves quarterly/yearly budget, maybe assists in hiring top 3 execs. If trouble appears, they become more involved.

As an IS, your involvement varies, but when you are collecting the mgmt fee and your financial success comes from the carry, I would think you would want to be helpful in any way possible###-###-#### % time commitment depending on success and skills of mgmt team.
commentor profile
Reply by a searcher
from Georgia Institute of Technology in Kansas City, MO, USA
This definitely is an area in which it is a risk to over generalize. The amount of involvement will vary on countless factors, and these factors will likely be different for each deal you work on. I would say three big factors that immediately come to mind are: 1) how much involvement your capital source desires/requires, 2) how much involvement you and/or the management team desires, and 3) independent of your own desires, how much time the company actually needs. That being said, I would err on the side of expecting to be more involved.
commentor profile
+7 more replies.
Join the discussion