Independence Day: Independent Sponsors Emerge as a Force in the Lower Middle Market
Not long ago, an independent sponsor walking into an auction without a committed pool of capital would struggle to be taken seriously. Today, investors are raising hundreds of millions of dollars specifically to back them. The shift reflects the rapid maturation of independent sponsors from an often-overlooked corner of private equity into an increasingly important buyer class—and a new way for institutional investors to gain access to coveted lower middle-market deals.
Independent sponsors are growing and maturing as a buyer class driven by seasoned private equity dealmakers leaving established firms to pursue acquisitions on their own rather than raising traditional funds. There are an estimated 1,500 independent sponsors in the U.S. and the number continues to grow.
Coming Tomorrow: Investors offer their recipes for success in how independent sponsors can raise capital for their deals.