Acquisition Finance Advisory for Independent Sponsors and Search Funds

Independent sponsors and search funds often source strong targets, win trust with sellers, and get part of the way through lender discussions, only to hit the same wall. Senior lenders will support a portion of the purchase price, equity backers are selective, and nobody is coordinating the full capital stack in a way that credit teams and investors can accept.

Financely works with independent sponsors and search funds that already have live opportunities and committed equity. Through regulated partners, we structure and arrange senior debt, mezzanine capital, bridge facilities, and where relevant, co investor capital so that credible buyers can close transactions rather than watch them drift to better prepared bidders.

Who This Service Is For

This page is aimed at sponsors who already have a real transaction in hand and money to put at risk. Typical clients include:

• Search funds with a signed LOI or APA and hard equity commitments from backers.
• Fundless sponsors with a track record in a sector and repeat equity relationships.
• Small private equity platforms and family offices backing independent sponsors on a deal by deal basis.
• Management teams running self sponsored MBOs and MBIs with vendor support and personal capital.

The common feature is a defined target with numbers on the table, not a general search for “financing options” without a live deal.

What We Arrange for Sponsors and Search Funds

Financely acts as advisor and arranger through regulated partners. We do not lend from our own balance sheet. We help sponsors design and secure:

• Senior acquisition loans and revolving facilities from banks and specialist lenders.
• Mezzanine loans or preferred equity to lift total leverage to sensible levels where cash flow allows.
• Bridge to close funding to deal with timing gaps around refinancings, earn outs, or delayed equity calls.
• Vendor notes and structured seller support that sit cleanly under intercreditor terms.

Each mandate focuses on one coherent capital stack that supports the business, the sponsor, and the seller’s closing requirements.

Leverage Levels and Capital Stack Design

For sponsors and search funds, the starting point is not a target leverage number. The starting point is cash flow after tax, maintenance capex, and realistic working capital needs. From there, we assess how much senior debt the business can carry, what portion can sit in a mezzanine layer, and how much equity is required to keep risk within acceptable ranges.

Many mid market acquisitions for strong targets and sponsors can support total funding in the 70 to 85 percent range of enterprise value. Some should sit lower. Our job is to push the capital stack only as far as the business can bear without turning a good opportunity into a fragile one.

Equity, Co Investors, and Fundless Sponsor Structures

Independent sponsors often face a second challenge. Even when the senior and mezzanine layers work on paper, equity commitments are fragmented across a group of backers, each with their own conditions. That can slow down negotiations and signal uncertainty to lenders and sellers.

While our primary focus is debt and mezzanine capital, we can work alongside a sponsor’s existing equity backers and, in selected cases, help coordinate co investor participation through regulated partners. The structure must still respect seller requirements, governance, and lender views on control and veto rights. No amount of creativity disguises a weak equity base.

Three Step Process from Mandate to Closing

Step 1: Submit the Deal and Sponsor Profile

Sponsors complete our intake form and share the LOI or purchase agreement, financials for the target, a short investment paper, and a summary of their own profile and equity commitments. We review whether the transaction and sponsor fit the pools of capital we work with.

Step 2: Structure, Model, and Approach the Market

Where a mandate is accepted, we build a detailed capital structure, run scenario analysis, and prepare lender ready materials. We then approach a focused group of banks, credit funds, and mezzanine providers who are active in comparable sponsor backed deals, rather than broadcast the opportunity widely.

Step 3: Term Sheets, Documentation, and Closing

Once indicative terms are in hand, we help sponsors compare offers, stress test covenants, and negotiate key points. We coordinate with senior and mezzanine lenders, legal teams, and sellers so that the capital stack is documented in line with what credit committees have approved. Closing follows once conditions are met and funds are drawn into the agreed structure.

What Sponsors Should Have Ready Before Contacting Us

Sponsors who move fastest through the process tend to arrive with:

• A signed LOI or APA with clear price, terms, and timing.
• At least three years of historical financials and up to date management accounts for the target.
• A base case and downside case model including debt service and capex.
• Evidence of equity commitments and details of any vendor support.
• Background information on the sponsor team and its track record.

If those basics are missing, the focus should be on getting the transaction and sponsor story to that level before talking about structured finance.

Fees and Engagement Terms

For sponsor and search fund acquisition mandates, Financely applies clear fees:

• Structuring fee: USD 5,000 once we accept the mandate and begin detailed structuring and modelling work.
• Underwriting and distribution fee: USD 15,000 covering preparation of materials, lender outreach, and process management through regulated partners.
• Success fee: 2.5 percent of the gross debt and mezzanine proceeds raised at closing, paid from transaction funds.

Legal, tax, accounting, diligence, and valuation costs are for the account of the client group. All work is carried out on a best efforts basis under a separate mandate letter that sets out the full commercial terms.

Independent Sponsor and Search Fund FAQ

Do you only work with sponsors who already have equity committed?

We focus on sponsors who can show real equity commitments, including their own capital. Where there is no equity and no clear plan to secure it, the probability of a bankable structure is low.

Can you arrange 100 percent financing for sponsor led acquisitions?

Full debt financing with no meaningful sponsor equity is extremely rare in professional markets. Most lenders and investors expect sponsors to contribute cash and to stand behind the transaction.

Will senior and mezzanine lenders accept fundless sponsors?

Many lenders work with fundless sponsors where there is a strong target, solid equity backing, and a sponsor team that brings real value. They pay close attention to governance, reporting, and the quality of co investors.

Do you act as a broker or as an advisor?

Financely acts as advisor and arranger through regulated partners. We structure the capital stack, prepare materials, and run a disciplined process with lenders and investors. Funding is always provided by third parties, not by Financely.

Which regions do you cover for sponsor and search fund deals?

Our focus is on transactions in North America, Europe, the Middle East, and selected Asian markets where our capital partners are active. For other regions we assess on a case by case basis.

Disclaimer: This page is for general information only and does not constitute advice, an offer, or a solicitation to buy or sell any financial product. References to leverage levels, lenders, and structures are high level and may not reflect the details of your situation. Financely acts as advisor and arranger through regulated partners and is not a bank or direct lender. Any facility or investment is subject to underwriting, KYC, AML, sanctions screening, legal review, perfected security, and approvals by relevant stakeholders. Professional and corporate audience only.