Most independent private equity sponsors are competent and well-intentioned. A small minority are not. These red flags surface the difference.
The list
1. Reluctance to share full deal-list returns including losses. 2. No personal capital, or co-invest funded by deferred fees rather than cash. 3. Refusal to provide references from sellers or co-investors. 4. Compressed diligence windows that prevent independent verification. 5. Aggressive promote structures with no catch-up disclosure. 6. Track record concentrated in a single recent vintage. 7. Operating partners listed on the website who have never closed a deal with the sponsor. 8. Lender commitments that arrive only days before the funding deadline.
How to respond
Any one of these warrants more questions. Two or more should prompt a hard reconsideration. A clean independent private equity sponsor will welcome scrutiny because their reputation is the asset that funds the next deal.
If you are evaluating a transaction in this space and want a candid second look, Solender Capital is happy to compare notes. Reach out through our contact page and share what you are working on.