The McGuireWoods Independent Sponsor Report, distilled

McGuireWoods, the law firm, has been running the Independent Sponsor Conference for over a decade and publishing an annual deal survey that is the only consistent benchmark on how independent sponsor deals are actually structured. If you operate as an independent sponsor or finance deals as an LP, this report is required reading.

The headline trends from the most recent surveys:

Closing fees compressed but stayed. The median closing fee on independent sponsor deals continues to sit in the 2 to 4 percent of equity range, with a long tail at higher percentages on smaller deals. The compression from earlier years (when 5 to 6 percent was common) reflects more sophisticated capital partners pushing back. Closing fees remain the single largest income event for most independent sponsors and are unlikely to disappear.

Management fees normalized to 3 to 5 percent of EBITDA. Annual management fees, paid by the portfolio company to the sponsor, have settled in the 3 to 5 percent of EBITDA range for most deals. Higher percentages on smaller deals (where 5 to 7 percent is still common) and lower on larger deals (where institutional capital pushes for 2 to 3 percent).

Carried interest is now standard. A decade ago, carry on independent sponsor deals was negotiated case by case, often absent entirely. The current data shows carry is present on the substantial majority of independent sponsor deals, structured most commonly as a 20 percent profit share over an 8 percent preferred return, with tiered carry above higher hurdles. The structure mirrors traditional PE.

Family offices remain the dominant capital partner. Roughly half of independent sponsor deals are funded primarily by single-family offices or multi-family offices. The next largest source is dedicated independent-sponsor capital firms (firms like Tecum Capital, Trivest, and others who fund independent sponsors as a strategy). Traditional PE funds participate in a meaningful minority of deals, typically as co-investors.

Deal sizes have grown. The median independent sponsor deal is now in the $25M to $50M enterprise value range, up from $10M to $25M a decade ago. The category has matured upmarket as more experienced sponsors have repeated the model and capital partners have become more comfortable.

The pipeline is denser than it has ever been. Both sponsor-side and capital-side participants report being inundated with deal flow. The competitive dynamic favors capital partners with strong sponsor relationships and sponsors with proprietary deal sourcing.

The implication for someone considering the independent sponsor path: the model is more institutionalized than it was, the economics are reasonable but compressing, and competitive differentiation is increasingly about deal quality and sourcing rather than fee structure. The era of being able to extract premium fees just by being one of the few people doing this is over.