Independent Sponsor Search

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December 08, 2023

by a searcher from The University of North Carolina at Chapel Hill - Kenan-Flagler Business School in Austin, TX, USA

Investors: I'm newer to the LP side of the house and would like to get new ideas of how/where you find independent sponsors (other than on Searchfunder). I know some investors find the deal and then place an independent sponsor, but I am hoping to find sponsors with deals in-hand. My answer in the comments below.

Side Question: Is my requirement that the sponsor have deep industry experience unrealistic?

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Reply by a searcher
from Duke University in Alpharetta, GA, USA
Depending on the check sizes you're comfortable writing, I'd look at professional associations such as ACG (association for corporate growth).

I'd rephrase your question slightly: "Given you haven't already raised a fund and have cash ready in hand, please explain how your firm is going to add value to the investment process."

Generically speaking, bidders without a fund are operating at a disadvantage. Independent sponsor deals have a far higher risk of not closing when funding falls through, a fact which is understood by many sellers.. If we're talking about premium quality assets, most IS bids are going to need to be "richer" to compensate sellers for this additional risk exposure. Any good independent sponsor should have a vision for overcoming this gap - good answers are:

- Better operating experience - opportunity sourcing, pricing, and management advantage
- Able to invest in assets below the purview of traditional private equity operators
- Exceptional capabilities in creating value in a relevant space (eg. buy & digitize companies)
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Reply by a searcher
from Columbia University in New York, NY, USA
As mentioned by others - SFunder, the McGuireWoods IS conference is a great place to meet independent sponsors. We are an independent sponsor ourselves and are working on closing a platform acquisition for YE###-###-#### Happy to set up a call to discuss in more detail: redacted Industry experience - it truly does depend on the industry and the investment thesis / capital deployment style of the LP. If in a highly specialized space where a roll up is required - experience is worth its weight in gold. If the LP has a bit more of a patient capital approach or is acquiring a family owned business which is retaining a lot of their institutional knowledge - it is less critical.
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