Lower Middle Market Independent Sponsor Data

Yesterday, Axial CEO Peter Lehrman spoke at McGuireWoods’ Independent Sponsors of New York (ISONY) networking lunch. Peter shared his observations on how he sees independent sponsors source, win and structure lower middle market deals.

The full presentation is here, and we’ve pulled out some snippets below.

Anonymized LOI Terms For Axial-Sourced Independent Sponsor Deals

Axial’s bi-monthly Winning LOI series surfaces the winning bids of Axial-sourced transactions, with a focus on key deal terms, including financials, multiples, earn-out structures, and deal-specific diligence requirements. 

The data points below are all Independent Sponsor led winning LOIs.

Source: Axial Platform Activity

Resources To Enable The Independent Sponsor Community

Axial offers a free lower middle market directory that allows the Independent Sponsor community to identify and connect with capital partners & sell-side dealmakers. 

Independent Sponsors leverage these directory member profiles to maximize their visibility with exit-minded business owners, dealmakers assembling buyer lists, and investment and operating talent. 

Below is a breakdown of firm count for a few of our core directory pages: 

• Axial’s Family Office Directory: 400+ Firms
• Axial’s Investment Bank Directory: 800+ Firms
• Axial’s M&A Advisor Directory: 1700+ Firms
• Axial’s Business Broker Directory: 900+ Firms

Independent Sponsor Research & Analysis From Axial

We recently surveyed our Independent Sponsor member network to dig into their deal sourcing methods, CRM usage, deal structuring trends, and valuation ranges for deals. 

Axial’s 2023 Independent Sponsor Report surfaces the survey findings and sheds light on the following topics:

• Market’s Perception & Drivers of Success
• Investment Approach
• Deal Origination
• Challenges Associated With Getting Deals Done

The research report linked above was published shortly after Axial’s inaugural list of the 25 Most Active Independent Sponsors. This ranking was assembled based on the deal-making activities of 421 Independent Sponsor, driven by three factors: 

• Total Closures: Total deals closed by the firm since inception
• Axial Closures: Total closed deals sourced via Axial 
• Process Effectiveness: Ability to progress to the IOI or LOI stage on deals sourced via Axial

In addition to the ranking, the publication also featured a breakdown of the deal making activity of Independent Sponsors on Axial.

Independent Sponsor Closed Deal Case Studies

Axial’s closed deal case studies explore the success stories of select Independent Sponsors and dive into the rationale behind their investment theses.

The full publications for the two case studies featured above can be found by following the links below: 

• Rolling up hardware stores: CMG completes 9 acquisitions in 2022
• How This Firm Uses the Silicon Valley Playbook in the LMM

Thanks for reading. If you’d like us to dive deeper into another type of buy- or sell-side firm, please reach out to [email protected].