Nimble Investors are Making Big Deals by Outhustling Private-Equity Giants

Nimble investors are making big deals by outhustling private-equity giants

As seen in Crain's New York Business

Sylvie Gadant, a Citrin Cooperman partner and leader of the firm's Transaction Advisory Services practice, is also the mastermind behind the now-renowned annual Independent Sponsor Report.  Sylvie was recently contacted by Crain's New York Business for her input on this article. The following is an excerpt from the original article from April 23, 2019:

It's thought that roughly 2,000 independent sponsors are scattered across some 250 firms. Many are refugees of established private- equity shops, banks and law firms. Others are business executives with a keen sense of when a competitor is ready to sell. Others have few bona fides at all beyond seeing private equity as the ticket to riches. A report by accounting firm Citrin Cooperman said 25% of independent sponsors rely on "industry research/cold calling" to find deals.

"It's the Wild West, and there are no barriers to entry," said Bruce Lipian, co-founder of Stone Creek Capital, one of the most established independent sponsors, with more than 20 years in the arena.

Yet independent sponsors almost never make headlines, because they usually buy firms that are small—perhaps with $10 million or so in annual operating income.

"Generally people are buying companies with a little hair on them," said Citrin Cooperman partner Sylvie Gadant. "You're talking about places with a small number of customers or maybe a founder who's ready to retire."

If a modest acquisition goes wrong, the downside is limited. But the potential upside is huge because independent sponsors can pocket management fees and carried interest and collect a big share of the proceeds when they sell a company.

To read the the full article, click here.