There are four types of financial buyers who might make an offer on your business, and more often than any other type, the one pitching you is an independent sponsor. That is M&A jargon for a buyer with no money. Yet. They raise it after you have signed an LOI with a no-shop clause, which means your leverage is gone while they go looking for it.
Travis Jamison is one of the people they come looking to. He runs Capital Pad, where investors fund independent sponsor deals, and he sees dozens of them for every one he says yes to. Independent sponsors are now behind roughly 28% of lower middle market acquisitions, which is more than traditional private equity does. In this episode of Built to Sell Radio, you discover how to:
- Tell which of the four types of financial buyers is behind an anonymous email
- Spot a seller note written to disappear if the business misses its numbers after closing
- Read a buyer’s investment thesis as a signal of whether they can actually close
- Judge how much protection you get when a buyer borrows half the purchase price instead of ninety percent
- Position a company as the platform in a roll-up rather than the tuck-in, where the spread runs two to four turns of EBITDA
- Recognize the point in a process where a founder’s identity, not the numbers, kills the deal
- Prepare for the moment an owner is handed an employment agreement for the first time
Travis also names the thing that killed a deal after the sponsor had already spent three hundred thousand dollars on diligence, and it was nothing in the numbers.
Watch the full episode below.
Quote of the Week
You should probably go learn about the independent sponsor space, because it is hot right now in the private equity world. And few people even know what that term means.
Travis Jamison
Curious what your business is really worth to a buyer? Let’s take a look.
Deals
CYMCOR, a professional services firm that manages the planning and commissioning of large data center construction projects for hyperscale and enterprise clients, was acquired by Limbach Holdings (NASDAQ: LMB), a building systems and mechanical services company, for $30M. CYMCOR is expected to generate $4M in EBITDA on $12M in revenue in 2027, implying a valuation of 7.5x forward EBITDA.
