Structuring Fundless sponsor
I'm putting together a checklist for a independent sponsor, in hopes I get hired by the dude leading the strategy.
Anyone willing to spot check and help fill in the gaps?
- Investment thesis white paper (sector, size, geography, hold time)
- Firm overview / deck
- Investment criteria (deal size, EBITDA, industry)
- Select legal counsel for deal / fund
- Value creation strategy (post-close initiatives)
- Firm branding (logo, email, website, presentation templates)
- Establish GP entity & management company
- Develop templates for standard NDA, IOI / LOI
- Structure deal entity template (SPV, waterfall model)
- Tax optimization (carried interest / management fees / equity)
- Template for side letters / co-invest
- Prospective LP database
- Template investment memos
- Template diligence / dataroom structures
- Team compensation & economics
- Sourcing system (connect with bankers, corp dev, proprietary, outreach tracker / CRMish)
- Establish third-party partners (QoE, tech DD, HR, insurance, etc.)
- Post-close accounting + compliance support for SPVs / portcos.
The biggest thing as an IS is simply making sure your deals look amazing on the buy. This is how you raise capital very quickly. Easier said than done obviously.
Would focus a lot on novel sourcing strategies.
One we use:
-BuiltWith to find relevant sites running software that indicates target revenue. IE you aren't running Google Analytics 360 if you're small potatoes bc that is 6 figures a year.
-Now pull all phone numbers. Personal is best via Apollo/ZoomInfo, whatever.
-Bomb them with ringless voicemail. Usually people have no clue its RVM. RVM is pretty cheap.
GL HF.
Thank you, appreciate the response. This particular situation put us very close to an asset with strong interest from investors, so the IS model is something we’re trying to implement almost reactively.
So I want to make sue we’re ahead of middle/back office functions + investor relations.
In that case, I'd say your legal/accounting vendors are probably going to help a lot and inform basic structure if that makes sense? And that structure depends on where the capital is that you're raising + how much.
IMO the best IS firms already have capital partners figured out (or at least a strong anchor, of which there are becoming more from the FoF world) before even finding a deal. Usually they have some semblance of a track record and arguably more importantly, have sourced deals before. There' a reason a lot of IS spin outs happen from the same firms over and over again with success. It's that they've hit their ceiling internally (carry is maxed out) and have sourced deals so finding a company to buy isn't new to them like it can be for firms who bifurcate BD and IS professionals.
Thank you, I appreciate the response. Similar to a poster above, the capital / deal side is where we're generally "ok" right now. What I'm asking is more about the blocking and tackling on the IS structure / execution, and also any pointers on the deal / capital side that might be helpful when thinking about future SPVs / scaling
Good capital providers should be able to assist here as the ones I alluded to above want to stick around if the goal is to raise a fund 3-5 years down the line. Given this they are willing to put in the work with being an extension of the team from this POV.
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