The Wild West of Private Equity: Citrin Cooperman’s Inaugural Independent Sponsor Report

A decade ago, independent sponsors were still operating on the fringes of the private equity industry. They were relatively few and far between, often fighting an uphill battle to convince companies and capital providers of their value.

Today, significant numbers of independent sponsors have entered the market, wanting to reap the benefits the model provides – better deal economics, more flexibility to choose deals, and less pressure to exit on a predetermined timeframe. Yet, despite the evolution of the sector, in many ways, it is still, as one survey contributor aptly described it, the “Wild West” of private equity.

Citrin Cooperman’s inaugural Independent Sponsor Report sheds light on the sector, as we share insights from those who fight the battle each day, offer recommendations from the trenches, and identify the rules and practices that independent sponsors use as they soldier on.

“Independent sponsors have been around for decades, but the population has exploded over the past several years,” says Sylvie Gadant, a partner at Citrin Cooperman. “And, despite the high mortality rate for the sector, the fact that 54 percent of our respondents have been in business for more than 5 years is a very encouraging sign.” 

As this year’s report shows, although the sector has seen significant evolution, it remains one without a clear playbook. It is a sector with considerable diversity in viewpoints, in approaches, and in economic terms, where some differences are expected and others surprising.

We expect, in future years, that the sector will continue to grow in popularity and acceptance, with more independent sponsor entrants and greater numbers of companies and capital providers embracing independent sponsor transactions. As the sector continues to mature, we also expect greater standardization of terms and best practices. We look forward to seeing how the model continues to flourish.

About this Survey
In the spring of 2017, through an online survey, 245 independent sponsors shared their outlook for the industry and operational issues such as deal flow and mechanics, capital sources, relationships with portfolio companies, and liquidity events. Our report includes the perspectives of leading independent sponsors and capital providers on the survey results. You can read the full report here.

About Citrin Cooperman
Citrin Cooperman is among the largest, full-service CPA firms in the United States – currently ranked in the top 25. With over 900 employees and 10 domestic locations along the East Coast, Citrin Cooperman has steadily built its business serving a diverse and loyal clientele since 1979. Our daily mission is to help our clients “focus on what counts.” We enhance the business and personal lives of our clients through our customized approach which includes offering a wide range of attest, assurance, tax, and business advisory services across the globe. Citrin Cooperman has deep experience in a variety of industries, including private equity, manufacturing and distribution, consumer products, health care, restaurants, franchising, staffing, financial services, shipping and logistics, and technology. Citrin Cooperman is an independent firm associated with Moore Stephens International Limited. (citrincooperman.com)