Independent (fundless) sponsors can improve their deal economics (equity ownership or carried interest, transaction fee, annual management fee) by following these 6 guidelines

1. The
Growth Capital
Guide
6 Ways to Improve Your
Ability to Negotiate
Better Independent
Sponsor Economics

2. Independent Sponsor Economics
Independent Sponsor
Economics often vary widely
based on the background of
the independent sponsor, the
deal dynamics and the
capital partners involved.

3. Typical Components of an
Independent Sponsor’s Economics
Deal or Transaction Fee
Ongoing Management
Fee
Promote, Carry or
Carried Interest
1 2 3

4. Deal or transaction fees are fees paid at closing to the independent
sponsor for putting a deal together. In many cases, it will be expected
that a portion of this fee will be rolled back into the transaction
alongside the other equity investors. Creative structuring may take
place to minimize the tax consequences to the independent sponsor.
Deal or Transaction Fee
Typical Components of an
Independent Sponsor’s Economics

5. A fundless sponsor’s management fee is a fee paid on an ongoing
basis for focusing on building and growing the portfolio company.
Generally, fundless sponsor management fees range from 3.5% to
7.5% of EBITDA, although depending on the size of the company, a
floor or ceiling may be established.
Ongoing Management Fee
Typical Components of an
Independent Sponsor’s Economics

6. An independent sponsor’s carried interest provides alignment of
incentives, allowing an independent sponsor to participate in the
value creation of the business and capital appreciation of the other
capital providers’ investments. Carried interest structures vary widely
by situation and capital provider.
The carried interest component usually represents the largest portion
of an independent sponsor’s compensation and is often a main point
of negotiation between the sponsor and capital partners.
Promote, Carry or Carried Interest
Typical Components of an
Independent Sponsor’s Economics

7. Improve Your Independent Sponsor
Economics by Following
These 6 Guidelines

8. 1. Focus on What You Know
Focus on acquiring businesses that fall in industries or
situations where you have extensive experience, relationships
or a track record.
Unless there’s a lengthy track record across multiple industries
or types of situations, it can be difficult for a private equity
firm or family office to get behind an independent sponsor
with no experience in the industry or the business that’s being
acquired.
Negotiating better economics will be a lot easier if you can
demonstrate why a capital partner should support you over
someone else, or a management team directly.

9. 2. Bring an Industry Specialist
Bring a veteran operating partner or executive with deep
industry experience to the table.
If you don’t have a deep background in the industry of the
target company, adding an industry executive who will either
augment the company’s leadership team or serve in a
strategic operating partner capacity is a great way to add
value to debt and equity capital providers who back fundless
sponsors.

10. 3. Find the Hidden Gem
Find a proprietary opportunity at an attractive valuation.
Bringing an opportunity to a capital provider that’s been
widely marketed by a capable investment bank is usually a
non-starter from the capital partners perspective. In many
cases, the private equity firm or family office will have seen the
opportunity directly.
Unless there is some compelling reason why the capital
partner should back the independent sponsor directly, save
yourself the time and look elsewhere. Focus on direct
opportunities or situations that haven’t been widely
auctioned.

11. 4. Develop a Growth Plan
Developing a thoughtful growth and value creation strategy is
a must.
A fundless sponsor who sends a lot of deals to capital partners
without thinking them through wastes capital partners’ time
and damages the credibility of the independent sponsor.
If you intend to discuss an opportunity with a debt or equity
financing source, you should be able to articulate why the
acquisition is compelling and what specific strategies should
be implemented to grow the business and create value.

12. 5. Tee Up Add-Ons
If growth by acquisition is part of the value creation strategy,
identify and possibly tee up other complimentary add-on
acquisitions.
Making add-on acquisitions can be a great way to grow a
company, achieve scale and create value. Sourcing a potential
follow-on acquisition opportunity or two can help demonstrate
to capital partners how you intend to increase the value of their
initial investment, and potentially, give them an opportunity to
put more dollars to work.
Having other opportunities lined up may put you in a better
position to negotiate your fundless sponsor compensation
package with a capital partner.

13. 6. Run a Process
Run a coordinated and systematic process to raise the capital.
We see independent sponsors or executives who frequently
partner with the first capital provider that agrees to do the
deal. While sometimes this makes sense because of timing
constraints, it usually leads to the independent sponsor getting
squeezed on economics, such as carried interest, a
management fee or a deal fee.
Running a more formal process allows the independent
sponsor to both: a) find the capital partner that is the best fit
with the sponsor and the business and; b) determine the
“market” economics for the fundless sponsor for the particular
situation.

14. 6. Run a Process (continued)
Run a coordinated and systematic process to raise the capital.
If you don’t have time to run a coordinated capital raising
process or don’t have the breadth of established relationships
with debt and equity capital providers to know whether or not
you’re being offered market-based independent sponsor
economics, contact Access Capital Partners.
We focus exclusively on raising capital for independent
sponsors and executives making acquisitions or recapitalizing
existing portfolio companies.

15. SAVE TIME, FOCUS ON
WHAT MATTERS
Focus on Deal Sourcing, New Deal
Evaluation, Target Company
Diligence and Value Creation of
Existing Portfolio Companies
ACCELERATE THE CAPITAL
RAISING PROCESS
CREDIBILITY WHEN
NEGOTIATING WITH SELLERS
IMPROVED FUNDLESS
SPONSOR ECONOMICS
ALIGNED INTERESTS
Our Acquisition Financing Process Aims
to Accelerate the Time to Structure,
Source Negotiate and Close the
Financing in a way the Aligns with the
Fundless Sponsor Model
Once the Proposed Financing
Structures Have Been Vetted by Some
of Our Capital Partners, We’ll Issue a
Support Letter or Discuss Financing
with the Seller or Seller’s Advisor
LEVERAGE OUR NETWORK
& RELATIONSHIPS
Our Independent Sponsor Financing
Process Aims to Preserve or Exceed
Market-Based Sponsor Economics
Success-Based Fee Structures and
Co-Investment Opportunities
Maintain Alignment with Our
Independent Sponsor Partners
We’ve Spent Years Identifying and
Developing Relationships with Debt
and Equity Capital Partners- Use
Them to complete more acquisitions
on Better Terms.
Partnering with Access Capital Partners

16. $8.0B+ 100+ 35+ 1000+
In total transaction
experience
Completed transactions Years of middle market
experience
Relationships with debt
and equity capital
providers across the globe
Access Capital Partners is an Investment Bank Focused on Providing Independent Financial
Sponsors and Executives with Unmatched Capital Raising Services.
We’ve Leveraged Years of Experience in Raising Capital Across a Wide Variety of Situations to
Develop a Focused Effort Tailored to the Unique Needs of Independent or Fundless Sponsors.
ABOUT ACCESS CAPITAL PARTNERS
Access Capital Partners
7733 Forsyth Blvd., Suite 1168
St. Louis, MO 63105
314.783.9550
www.accesscappartners.com
www.fundlesssponsorcapital.com
Securities offered through StillPoint Capital LLC, Member FINRA and SIPC Tampa, FL 33626. StillPoint Capital is not affiliated with Access Capital Partners.
Greg Porto
312.339.2857
gporto@accesscappartners.com
Greg Tobben
314.458.8186
gtobben@accesscappartners.com