At 4 Pillars Group we are independent sponsors. We raise deal by deal with no dedicated fund. We partner with operators and take a minority position. After close we support the operator with long term strategy and pressing needs.
I have found it is very important to be upfront with sellers. I am not going to run your business nor will you see me every day. I am helping to raise money, close the deal, and support the operator. I always tell them upfront so there is no bait and switch situation. This community understands that but 99% of the population doesn’t. We don’t over complicate it because it’s not overly complicated!
Independent Sponsor Explanation to Sellers
by a searcher from Louisiana Tech University
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We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
In addition to raising the equity capital, the independent sponsor structures and executes the transaction. For this reason, independent sponsors are usually experienced PE or M&A professionals. (However, if an independent sponsor raises most of the capital from a funded private equity group, that PEG is going to take the lead in structuring and executing the deal.) Sometimes an independent sponsor partners with a searcher who will run the acquired business. Other times, the operator is a proven C-level executive, often in the targeted industry. The independent sponsor usually has a board seat, has reporting rights, etc., and often - if they bring value-added business experience to the table - participates in advising on strategic direction of the acquired business.
I fully agree with being transparent and explaining to a seller the role of an IS. However, it's best that the IS itself be clear on what it does and doesn't do ....because as you say above "I am not going to run your business" but a seller might get a different idea from your website: "We are far more than hands off investors, we are operators."
For those who have a different take on what an IS does, I realize that some folks use the term more loosely or differently, or run some other variation than outlined above. If you do, no problem. Call it whatever, or better yet don't use the term at all, and instead just explain what your role and your professional experience is.