Types of Independent Sponsors: How Fundless Sponsors Get Deals Done

According to Axial, Independent Sponsors accounted for 31% of all platform-sourced closed deals in 2024. If you’re considering the fundless sponsor route, understanding which model fits your background is critical to your success.

These buyers lead middle-market acquisitions without a traditional committed fund. Instead, they source deals first, then raise capital on a deal-by-deal basis. This flexible model has gained significant traction with private equity firms, family offices, and high-net-worth investors who want direct access to quality businesses, without backing a blind pool of capital.

But not all independent sponsors are the same. Here are the four most common types you’ll encounter, along with their approaches to acquiring businesses and raising capital.

1. Operator-Led Independent Sponsors

• Who they are: Experienced operators who know an industry inside and out.
• Background: Former CEOs, general managers, or business owners.
• Key strength: Hands-on operational improvement and deep sector expertise.
• Capital strategy: They often partner with a private equity firm or family office for equity financing and step in as active management.

Example: A former operations director acquiring a $3M EBITDA distribution company with family office backing to implement supply chain improvements.

Why it matters: If you’re an operator with industry expertise, this path allows you to leverage your experience to grow an existing business, while investors get comfort in your leadership.

2. Deal Maker Independent Sponsors

• Who they are: Financial experts and transaction specialists.
• Background: Ex-investment bankers, M&A advisors, or former private equity professionals.
• Key strength: Deal sourcing, negotiation, capital structuring.
• Capital strategy: Build a capital stack combining private equity, mezzanine financing, and senior debt.

Example: A former bulge-bracket banker buying a B2B SaaS company with a private equity co-investor plus senior debt.

Why it matters: Deal-makers excel at finding attractive businesses for sale, structuring complex deals, and raising the right mix of capital to close.

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New to Business Acquisition? Understanding the most common deal structures and acquisition strategies should be priority one, here are a couple of other posts that might help.

• Mini-Guide: Aligning Acquisition Strategy
• Most Common M&A Deal Structures

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3. Entrepreneurial Independent Sponsors

• Who they are: First-time buyers, search funders, or individuals with a startup mindset.
• Background: MBAs, small business buyers, or career switchers looking to acquire their first business.
• Key strength: Agility, passion, and an ability to connect with founders.
• Capital strategy: Frequently relies on seller financing, SBA loans, or minority investors to fund the acquisition.

Example: A former consultant purchasing a $2M EBITDA marketing services company using a combination of SBA financing and seller financing.

Why it matters: This is often the entry point for individuals who want to buy a small business and operate it, without starting one from scratch.

4. Institutional-Style Independent Sponsors

• Who they are: Experienced teams running like a private equity firm — but still independent.
• Background: Former private equity partners or teams backed by family offices.
• Key strength: Formal investment processes, repeatable deal flow, and pre-committed capital partners.
• Capital strategy: Focus on platforms, roll-ups, or sector-specific strategies — without managing a dedicated fund.

Example: An ex-MidCap PE team executing a healthcare buy-and-build strategy with flexible capital partners.

Why it matters: This model combines the best of both worlds: the discipline of a traditional fund and the freedom to raise capital deal by deal.

Which Independent Sponsor Model Fits Your Background and Goals?

Your experience, network, and deal size preferences determine which independent sponsor model makes sense for you. Each approach has distinct advantages, but success ultimately depends on matching your background to the right strategy and executing with the proper support.

Ready to move from exploring to executing?

Whether you’re exploring your first acquisition or your fifth, our team can help you develop and execute a winning strategy. Schedule a free discovery call to get started.