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Independent Sponsor (Fundless Sponsor)

Definition - What does Independent Sponsor (Fundless Sponsor) mean?

An independent sponsor, or fundless sponsor, is a type of capital group or individual seeking acquisition candidates without having the equity financing required to complete the transaction up front (hence, they are "fundless"). Independent sponsors are usually ex-M&A professionals (investment bankers or private equity experts) who desire equity ownership in a business and/or would like to be more involved in the operations and growth of an organization.

Divestopedia explains Independent Sponsor (Fundless Sponsor)

Independent sponsor groups often possess extensive experience with middle market transactions, management teams, and mid-sized organizations; and can serve as valuable advisors to complement the acquisition and operations of the organization. However, in order to complete a transaction, they need a strong financing partner such as a private equity group, family office or high net worth individual. For their valuable services, independent sponsors may typically receive a closing fee, equity stake and ongoing management fee as compensation.

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Resources

  • Equicapita: Equicapita
    Equicapita's model is to acquire established, private small and medium sized enterprises (“SMEs”) located primarily in Western Canada.
  • Evolution Capital: Evolution Capital
    Leaders in growing small business.