{
  "title": "What is an independent sponsor? Definition and example",
  "url": "https://acquisitions.com/blog/what-is-an-independent-sponsor/",
  "author": "Moran Pober",
  "publisher": "Acquisitions.com",
  "published": "2026-10-24",
  "updated": "2026-10-24",
  "section": "Glossary",
  "keyword": "Independent sponsor",
  "short_answer": "An independent sponsor is a person or small team that finds a business to buy, signs a letter of intent, and then raises the equity from investors one deal at a time instead of from a standing fund. The sponsor is usually paid a closing fee, a yearly management fee and a share of the profit called carried interest or a promote.",
  "facts": {
    "Purchase price": [
      "$8,000,000",
      "5x EBITDA of $1,600,000"
    ],
    "Bank and seller debt": [
      "$5,000,000",
      "62.5% of the price"
    ],
    "Equity raised from investors": [
      "$3,000,000",
      "Deal-by-deal, no fund"
    ],
    "Sponsor closing fee": [
      "$160,000",
      "2% of the purchase price"
    ],
    "Sponsor management fee": [
      "$80,000 a year",
      "5% of EBITDA"
    ],
    "Equity value at exit, year 5": [
      "$9,000,000",
      "After the remaining debt is repaid"
    ],
    "Investor gain before promote": [
      "$6,000,000",
      "$9,000,000 less $3,000,000 invested"
    ],
    "Preferred return to investors": [
      "$1,200,000",
      "8% simple a year on $3,000,000 for 5 years"
    ],
    "Sponsor promote": [
      "$960,000",
      "20% of the $4,800,000 left after the preferred return"
    ]
  },
  "sources": [
    "https://www.sec.gov/resources-small-businesses/exempt-offerings/private-placements-rule-506b",
    "https://www.sec.gov/about/divisions-offices/division-trading-markets/division-trading-markets-compliance-guides/guide-broker-dealer-registration",
    "https://www.investor.gov",
    "https://www.investopedia.com/terms/p/privateequity.asp"
  ],
  "license": "Facts may be quoted with attribution to Acquisitions.com and a link to the url above."
}