Capital Raising for Independent Sponsors - Solo or Advised?

At F2H, we bring white-glove advisory to secondaries, capital raising, and M&A under $150m – delivering the sophistication of top-tier investment banking to small GPs, LPs, and companies. Whether you’re raising capital for an acquisition or deal, our team is here to help. Contact us today to start the conversation.

‍

Introduction

Independent sponsors — dealmakers who source acquisitions without a committed fund — play an increasingly important role in the private markets. They identify opportunities, structure transactions, and then raise both equity and debt from external investors on a deal-by-deal basis.

But independent sponsors face a familiar decision: should they hire an investment bank or advisor to help raise equity and debt, or go directly to capital providers themselves? The answer has major implications for valuation, deal certainty, and economics.

What “going it alone” means for independent sponsors

• Equity outreach: Sponsors approach family offices, high-net-worth individuals, private equity funds, or co-investors directly.
• Debt sourcing: Sponsors negotiate with commercial banks, mezzanine lenders, or private credit providers themselves.
• Negotiations: Sponsors set their own economics — management fees, carried interest, governance rights — without third-party intermediation.
• Control and cost: Sponsors avoid advisory fees and retain full control over investor selection and terms.
• Challenges: Without an advisor, sponsors must juggle capital raising, debt negotiations, and transaction diligence simultaneously — often under exclusivity deadlines.

Going alone works best for sponsors who already have a deep bench of repeat capital partners.

‍

What an advisor brings to sponsor-led capital raising

Investor access and credibility

• Established relationships with family offices, fund-of-funds, credit funds, and co-invest partners.
• Brings institutional credibility to sponsors who may be unknown to larger investors.

Structuring support

• Normalizes sponsor economics (carry, fee splits, governance rights) to align with market standards.
• Advises on blending senior debt, mezzanine, and equity into a cohesive capital stack.

Competitive tension

• By running a structured outreach, advisors can bring multiple investors into the process, improving terms and economics for the independent sponsor.

Execution management

• Coordinates diligence requests, manages lender negotiations, and synchronizes timing between equity and debt providers.
• Acts as a buffer, enabling the sponsor to focus on deal execution and management meetings.

‍

Pros of hiring an advisor

• Increases credibility with institutional equity and credit providers.
• Improves certainty of close by aligning debt and equity timelines.
• Creates competitive tension, driving better sponsor economics.
• Saves time, allowing the sponsor to focus on closing the deal rather than chasing capital.

Costs and risks of hiring an advisor

• Fees: Advisors may charge 2–5% of capital raised.
• Control trade-off: Advisors may push toward investors that are less aligned with the sponsor’s long-term goals.
• Investor preferences: Some family offices prefer a direct relationship with the sponsor and may view bankers as unnecessary.
• Selection risk: A poor-quality advisor can waste valuable exclusivity time.

When “going it alone” can work

• Repeat sponsors with established LP clubs and lender relationships.

Decision framework

‍

Best practices if hiring

• Specialization matters: Look for advisors who understand independent sponsor models, not just large buyout funds.
• Align incentives: Push for fee structures tied to success and scale, not heavy retainers. (F2H does not charge a retainer and is highly selective about mandates.)
• Maintain sponsor economics: Ensure advisors respect and protect carried-interest norms.
• Stay front and center: Sponsors must remain the “face” of the deal to investors — the advisor should support, not replace, sponsor leadership.
• Vet relationships: Confirm the advisor has deep ties to the right investors for your deal size and industry.

‍

Conclusion

For independent sponsors, the choice between hiring an advisor or going alone hinges on deal size, complexity, investor access, and experience. Larger, more complex transactions — especially those requiring both debt and equity from multiple sources — benefit from the structure, credibility, and execution support an advisor provides.

For smaller or repeat deals where sponsors already have trusted capital partners, going it alone may be faster and more economical. Independent sponsors succeed when they maximize both deal execution and investor alignment. Whether with or without an advisor, the key is creating a process that delivers certainty of close while protecting long-term sponsor economics.

‍

At F2H, we bring white-glove advisory to secondaries, capital raising, and M&A under $150m – delivering the sophistication of top-tier investment banking to small GPs, LPs, and companies. Whether you’re raising capital for an acquisition or deal, our team is here to help. Contact us today to start the conversation.