As Fundraising Stalls, Independent Sponsors Fill Gap in Lower-Middle Market | Keirsten Lawton in Institutional Investor

Cambridge Associates’ Co-Head of North American Private Equity Research, Keirsten Lawton, spoke with Institutional Investor on the rise of independent sponsors and the growing role they are playing in the lower-middle market.

As institutional capital continues to concentrate around larger companies and megafunds, Keirsten explains how a growing cohort of experienced private equity professionals, typically one to three people, are doing deals outside the traditional fund construct, targeting established businesses with $1 million to $5 million in EBITDA that often change hands without the involvement of investment banks or other sophisticated intermediaries.

“The maturing of the private equity industry has created this talent to produce these deals in a more entrepreneurial way, which can be an exciting and compelling opportunity,” says Keirsten.

She also discusses how the independent sponsor model is increasingly serving as a stepping stone for emerging managers looking to build a track record before raising a debut fund — and why selectivity remains essential in an expanding, maturing market. “Private equity still presents significant opportunities to generate outsized returns, but it’s harder, and the returns are concentrated, and it’s an expanding maturing market,” she notes.

Read the full feature in Institutional Investor.