Definition
Sponsors identify deals, raise capital, manage acquisition and operations. They're compensated through fees and profit splits. Experience and track record are critical.
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Sponsors (syndicators) identify deals, raise capital, manage acquisition and operations. Compensated through acquisition fees (1-3%), management fees (0.5-2%), and profit splits. Experience and track record critical to success. Typically have significant skin-in-the-game (10-25%). Capital raising and fundraising responsibilities. Ongoing asset management and investor communication required. Performance directly impacts sponsor reputation and returns. Key risk factor in investment decision. Professional sponsorship significantly improves outcomes.
Pro Tip
Sponsor track record and experience are most important evaluation criteria.
Example
Experienced sponsor acquired and manages a 200-unit apartment complex for investor group.