Setting up an Independent Sponsor entity: SEC / FINRA Registration?

October 30, 2025

by a searcher from Vanderbilt University in Dallas, TX, USA

I'm setting up an entity to act as an independent sponsor for the first time. I will be working closely with the acquisition target in the management of the business, and will be receiving management fees and carry. After speaking to an M&A attorney, he mentioned the potential need to register as a Broker Dealer and an Investment Advisor. Does anyone have any experience with this? The transaction at hand should fall under the $25M Ebitda / $250M Gross revenue threshold, but I intend to use my experience over the last few years to do several small roll-ups at a time, and potentially managing a fund in the future. So, even if I can get through this transaction without the registration, I may want to go ahead and get it knocked out. I'd love to know if anyone has any experience here and might be able to direct me to an experienced attorney to get this set / figured out.

Reply by an intermediary
in Austin, TX, USA

Separating the two issues helps understand the M&A attorney's point. First, the indy sponsor acquisition is not generally considered a securities transaction requiring BD registration since you are an owner acting for your own account (not the account of others) and you are actively managing the investment. Same logic for a roll up. You must be a RIA or have a RIA on staff or retainer if you raise a fund >$150 million. If you really wanted to become a registered representative of a broker dealer you first have to take the SIE exam, then find a BD to sponsor you for the remaining exams (typically series 7 and 63). Plan on at least 0.5 to 1 year to make it through the whole process.

Join the discussion