Becoming an Independent Sponsor

  • Peter Lynch
Last week I was lucky enough to interview Mason Barrett on his decision to set out as an independent sponsor. For those of you unfamiliar with this career track, Independent Sponsors pursue entrepreneurship through acquisition; his intention is to identify a company and raise capital to acquire it.

Most independent sponsors have a background in private equity, investment banking, general management or consulting. In short, they are individuals with exposure to transactions and / or operations. As a career option, this model is attractive because it provides an accelerated path to becoming a significant equity participant with an executive and / or board-level role in an acquired business. In short, if executed correctly, it can massively accelerate your career.

I have worked with many independent sponsors, and in a prior role I also funded independent sponsors that had identified attractive opportunities. In my experience, the most difficult part of the process is getting the first acquisition right, and that is precisely why I wanted to interview Mason. He has researched the role, decided how to fund his approach, developed an investment thesis and recruited a team of interns to help with sourcing and analysis, but he is still early in the process and has not yet closed on his first transaction. So you get a first-hand account of what it’s like to be living the independent sponsor life.

In this video interview we cover a variety of topics to help explain how future independent sponsors should approach the decision to buy their own company. A summary of topics with timestamps and helpful resources can be found below:

Video Timestamps:

  1. [LINK] Detail on the Self Funded Approach
  2. [LINK] Detail on the Search Fund Approach
  3. [LINK] Search Backer Economics and Rights
  4. [LINK] Mental Preparation for the Search Process
  5. [LINK] Investment Thesis
  6. [LINK] Raising Equity
  7. [LINK] Sourcing Strategy for Independent Sponsors
  8. [LINK] Getting the Business Owner on the Phone
  9. [LINK] Talking About Valuation with the Business Owner
  10. [LINK] Motivation: The Enormous Success of Richard Reese

Favorite Educational Resources for Independent Sponsors:

  1. [LINK] Book: HBR Guide to Buying a Small Business
  2. [LINK] Blog: Jim Stein Sharpe
  3. [LINK] Website: SearchFunder

Related ASM Content:

  1. [LINK] Introduction to Independent Sponsors
  2. [LINK] Independent Sponsor Economics
  3. [LINK] Funded vs Fundless Private Equity

Independent Sponsor Structure