Independent Sponsors: How are you maintaining guidance / control post-capital partner introduction?
August 19, 2025
by an member in Johns Creek, GA, USA
As there is an increasing number of independent sponsors ("IS") who are excited about the space and are eager to join, there are some challenges that I've been hearing about.
This issue has arisen more than once, and it seems that the IS is often "sidelined", reduced to a tag-along role while the capital provider drives the process to close. Essentially, a capital partner (pe / pc fund, FO, etc) will back the deal, but as you approach closing, they increasingly want to run the show and sideline the independent sponsor.
I've seen some folks not care about this dynamic, with the end goal being to get the transaction fee, reinvest into equity, and connect management to the capital provider. That seems more or less a quasi-M&A role where you're taking a stake in the company vs a success fee.
For those without a fund, what strategies are you using to preserve a meaningful role and protect your economics after the capital partner is at the table?
For those that don't have a committed fund, how are you handling this?
- Bake your role/economics into LOI before capital intro?
- Negotiate governance and board rights upfront, or only at the term sheet stage?
- Use side letters/fee agreements to make sure you don't get pushed out?
Curious to hear what's worked for independent sponsors to protect their seat at the table all the way through close (and beyond).
from University of Wisconsin in New York, NY, USA
in Johns Creek, GA, USA