The independent sponsor model, often called the deal-by-deal approach, is moving from niche to mainstream in European private markets. Long established in the US, this model is now maturing across Europe and the UK, as investors and managers prioritise greater flexibility and alignment.
Independent sponsors differ from traditional private equity funds by sourcing deals first and raising capital on a case-by-case basis, rather than raising a blind-pool fund. The model allows experienced dealmakers to invest without a formal fund structure whilst giving investors greater control and transparency at the deal level.
At Langham Hall, we work with a growing number of private equity and real estate managers adopting this approach to gain flexibility and streamline execution.
Why independent sponsors are gaining traction across Europe
1. Flexibility and visibility for investors
As investors seek greater oversight and flexibility in capital deployment, limited partners (LPs) increasingly value the ability to assess each investment individually. The independent sponsor model offers transparency and control over commitments, helping LPs manage exposure and maintain discipline in volatile markets. Independent sponsors are also free from the constraints of a traditional fund strategy, having the agility to pursue diverse opportunities and adapt swiftly to changing market conditions.
2. Simpler economics and (often) earlier returns
Independent sponsors typically earn a combination of closing fees, management fees and carried interest, creating a flexible and performance-driven economic model.
- Carried interest remains the primary incentive and is usually realised on a deal-by-deal basis, often allowing sponsors to receive carry earlier than in traditional fund structures with a ‘whole of fund’ waterfall, where carry is often payable towards the end of the J-curve. Terms are often bespoke, with a growing number of managers choosing a tiered approach rather than fixed-percentage or straight-line waterfalls. In a tiered waterfall, managers typically see three to four carry tiers with escalating percentages once returns exceed agreed hurdles.
- Closing fee (also known as arrangement or deal fees) compensates sponsors for the time, effort and risk involved in sourcing and executing transactions.
- Management fee (sometimes described as monitoring, consulting or advisory fees) compensates sponsors for ongoing oversight of the investment vehicle and portfolio company. In most cases, this fee is charged to the target company rather than investors, reflecting the sponsor’s active management role.
Together, these features can reduce cost and complexity whilst improving alignment between sponsors and investors, supporting efficient capital deployment and earlier returns.
Partners at Addleshaw Goddard, Jan Gruter and Ben Cocoracchio, note that: “Europe’s independent sponsor community has expanded quickly, with sponsors and investors converging on clearer deal terms.”
3. Building track record
For managers aiming to establish a track record, starting as an independent sponsor offers a practical route ahead of a blind pool fundraise. Successful transactions can demonstrate capability and create a foundation for a future institutional fundraise.
For example, in 2023 we supported a new independent sponsor who completed five platform investments, and several add-ons, before launching their first blind pool fund in 2025. The fund subsequently held a first close late last year, with capital committed from both new and existing LPs.
Moving from deal-by-deal execution to a first blind pool fund comes with a whole new set of considerations, but it is often the natural progression for sponsors as their track record and LP relationships evolve.
Structural considerations for the deal-by-deal approach
Independent sponsors in Europe are increasingly turning to cost-efficient and lightly regulated structures. Guernsey and Jersey, in the Channel Islands, have become attractive domiciles, offering flexibility via options such as the Guernsey Protected Cell Company (PCC) and the Jersey Private Fund.
In the UK, managers may use the Appointed Representative regime, operating under the regulatory umbrella of an authorised Principal, such as Langham Hall. This can enable faster execution timelines and quicker capital returns whilst maintaining compliance with local requirements. In the case of JVs and SMAs, these will often be classified as a Collective Investment Scheme (CIS) in the UK which will require the appointment of an FCA operator.
These structures support the model’s entrepreneurial nature, allowing sponsors to focus on deal origination, due diligence and value creation rather than fund structuring and regulation.
Irrespective of structure, the sponsors that scale most effectively put standardisation in place early. Consistent economics and expense allocation, clear conflicts governance and a repeatable reporting approach reduce friction and support a clean transition if Fund I becomes the destination.
Langham Hall’s view
The recent downturn in blind-pool fundraising has brought the independent sponsor model into the spotlight, and the rapid growth in this market suggests it is more than just a passing trend. For many managers, it represents a deliberate shift towards a more flexible and efficient way to participate in private markets without the constraints of traditional fund structures.
At Langham Hall, we continue to see rising interest from both sponsors and investors exploring bespoke, transaction-driven models. We support these sponsors right at the start of their journey, as an Appointed Representative, and subsequently with the administration of the respective investment structures. With the right governance and structuring, starting as an independent sponsor can serve as a bridge between entrepreneurial investment and institutional-level execution.
