Syndication with No Sponsor Equity Contribution

[Account Closed]

Hi,

Wondering if anyone has any experience syndicating deals with no sponsor equity contribution.  If so I would appreciate your comments on how to go about structuring the deal to provide investors "peace of mind" even though you as the sponsor are contributing little to no capital.

I have syndicated about 10 deals in the past but have always contributed about 10% of the capital myself.   Wondering how to get into larger deals where I may not be in a liquid enough position to commit capital.

Thanks in Advance!

[David Miller]

Ruben Guerrero I say well done to Jeff Greenberg for building enough trust with his investors and expertise to syndicate with no equity in the deal. That said, I find that arrangement to be the exception to the rule and in general a sponsor with no equity in the deal is a big red flag.

If you are short on capital, you might structure the deal such that any acquisition or management or other fees you receive as sponsor must be put toward your equity position. An investor might also be willing to loan you the capital which you can pay back over time with interest or perhaps through a preferred return via your waterfall.