Selecting the ideal funding companion is crucial for independent sponsors. Unfortunately, we typically hear scary tales from enrollers concerning resources partners that re-trade bargains, back out at the last minute or become less than suitable partners after a transaction closes.
We commonly discover our clients asking us: Which capital resources make the most effective partners for unfunded sponsors? What should fundless sponsors try to find in a capital partner? What type of funding resource would certainly be the best suitable for me and also my deals?
Below are 3 traits shared by terrific independent enroller funding resources:
1. They Offer Fair Independent Sponsor Economics
The recommended independent enroller business economics (deal fee/ promote, lugged passion or possession/ continuous management charge) are designed to compensate the enroller for the value provided and also to incentivize them to expand the business being acquired.
If you bring a proprietary offer, at an eye-catching assessment, with a strong management group and development strategy to the table, you need to be compensated with superior fundless sponsor business economics. Why is anything less than that practical or acceptable?
Be careful not to come under the catch of approving listed below market business economics if you can prevent it. Most of the long-time and widely known fundless enroller funding providers often make use of their unfunded counterparts, especially brand-new sponsors or ones that aren’t running a tight resources elevating process.
Any pushback from a capital resource such as “Well, it’s a stretch deal for us” or “That’s not what we do” implies they are most likely not a good suitable for you or your bargain.
2. They Embrace the Independent Enroller Design
The ideal financing source welcomes the independent sponsor model because they intend to, not since they need to.
Let’s face it, not every SBIC, family office or private equity fund truly wishes to attach fundless enrollers, yet as the independent enroller market has grown, it has come to be harder for private equity firms to disregard as a practical source of bargain flow.
You need to ask the ideal concerns – the number of independent sponsor deals have they done? What business economics have they gave enrollers in the past? What are their requirements for fundless enroller deals? Exactly how do they see your function after the deal closes? Based on their responses, you can make a decision if they truly intend to deal with you …
3. They Offer More than Simply Financial Debt or Equity Capital
A great funding companion brings even more to the table than the funding to close your offer.
The very best funding resources are strategic – they will enable growth by funding add-on procurements; they have helpful industry links; they have understanding on best practices to expand a service.
As a financial investment bank focused specifically on elevating debt as well as equity capital for independent enrollers, we’ve invested years constructing partnerships with resources companies and know which financing resources will be one of the most corresponding for various kinds of bargains and also enrollers. Fit issues in a collaboration.