CapitalPad for sponsors
$1M to $2.5M in equity for lower middle market transactions
$1M to $2.5M in equity for lower middle market transactions
The firm
CapitalPad is a private equity co-investment group that invests alongside independent sponsors in lower middle market acquisitions. A three-person investment committee reviews each transaction.
Opportunities that meet our underwriting bar are presented to our LPs on a deal-by-deal basis. Participating commitments are aggregated into a single CapitalPad SPV, giving sponsors one investment party through diligence, documentation, funding, and post-close administration.
CapitalPad does not charge sponsors any fees.
| Typical check | $1M to $2.5M |
|---|---|
| Enterprise value | $5M and above |
| EBITDA | $1M and above |
| Geography | U.S. and Canada |
| Deal type | Buyouts, recapitalizations, and buy-and-build |
| Role | Minority equity co-investor |
| Deal stage | Under LOI |
| Governance | Customary minority investor protectionsNo board seats |
Investment focus
CapitalPad focuses on established, historically profitable businesses with recurring, repeat, essential, or compliance-driven demand.
We invest across industries, with an emphasis on understandable business economics, existing cash flow, and a credible plan for growth. That plan may include operational improvements, organic growth, or add-on acquisitions.
Startups, distressed assets, and major turnarounds fall outside our investment focus.
Underwriting
Our process
Send a teaser or CIM and the proposed transaction structure. CapitalPad's investment committee provides initial feedback on fit within 2 to 3 business days.
Opportunities that meet our underwriting bar are presented to CapitalPad's LPs on a blinded basis. Identifying materials and data-room access require an NDA and sponsor approval.
Once allocations are finalized, CapitalPad aggregates participating commitments into a single SPV that funds at close. CapitalPad manages the LP-facing process, including post-close administration.
“CapitalPad was instrumental in helping close our transaction. They’ve remained excellent partners even after the close, leveraging their professional backgrounds to help modernize the business. Looking forward to working with the CapitalPad team in the months and years to come.”
The CapitalPad team
CapitalPad's team combines experience building and operating companies with institutional private equity and independent sponsor investing. That experience informs both transaction review and the team's work with sponsors after close. Meet the team →
For a transaction under LOI or in advanced diligence, send a teaser or CIM and the proposed structure. Include the equity requirement and expected closing date.
For a transaction under LOI or in advanced diligence, send a teaser or CIM and the proposed structure. Include the equity requirement and expected closing date.
A mutual NDA is incorporated into the submission process.
CapitalPad invests in sponsor-led buyouts, recapitalizations, and buy-and-build strategies involving established, profitable lower middle market companies.
The target profile includes businesses with EBITDA of $1M or more, enterprise values of $5M or more, and operations in the United States or Canada.
CapitalPad’s typical equity investment is $1M to $2.5M per transaction. The final allocation is determined through the investment review and commitment process.
CapitalPad is industry-agnostic, with a focus on established businesses supported by recurring, repeat, essential, or compliance-driven demand.
Representative sectors include business services, residential and commercial services, healthcare, specialty distribution, and niche manufacturing. Startups, distressed businesses, and major turnarounds are outside CapitalPad’s investment focus.
CapitalPad invests as a minority equity co-investor. The independent sponsor leads the transaction and the post-close operating plan.
CapitalPad seeks customary minority investor protections and does not take board seats.
CapitalPad invests through a transaction-specific SPV. Sponsors work directly with the CapitalPad team throughout diligence, documentation, funding, and post-close administration.
CapitalPad manages the LP-facing process, including commitments and investor communications.
CapitalPad reviews proposed acquisition and management fees, preferred returns, and sponsor promote as part of the transaction’s overall economics.
The emphasis is on market-standard independent sponsor terms that align sponsor incentives with investor outcomes, considered in the context of the business and capital structure.
CapitalPad generally reviews transactions under LOI or in advanced diligence. Initial materials should include a teaser or CIM, the proposed transaction structure, the equity requirement, and the expected closing date.
CapitalPad’s three-person investment committee provides initial feedback on fit within two to three business days. Transactions that meet the investment criteria proceed to further diligence and review of the proposed terms. If CapitalPad does not proceed, submission materials remain confidential.
CapitalPad incorporates a mutual NDA into the transaction submission process. Opportunities selected for LP review are initially presented on a blinded basis.
Identifying materials and data-room access require an NDA and sponsor approval.
CapitalPad confirms its allocation once participating LP commitments are finalized. Transactions approved by the investment committee proceed to LP review on a deal-by-deal basis.
CapitalPad manages the commitment process and keeps the sponsor informed of allocation progress. Any changes affecting the expected investment amount or funding timeline are communicated directly.
CapitalPad invests equity and does not provide debt financing. Debt financing is arranged separately as part of the transaction’s capital structure.
CapitalPad selectively reviews search fund acquisitions once the target business is under LOI. Independent sponsor transactions remain CapitalPad’s primary focus.
CapitalPad remains engaged as a minority equity partner after closing and expects quarterly reporting consistent with institutional investor standards.
Depending on the needs of the business, CapitalPad can provide strategic input, introductions to service providers, and perspective on add-on acquisitions, financing, and exit planning.
Independent sponsors raise equity capital from family offices, private equity funds, and co-investment groups such as CapitalPad. Some SBICs and mezzanine funds also invest equity alongside their debt financing.
CapitalPad is a private equity co-investment group and dedicated equity capital provider for independent sponsors, with typical investments of $1M to $2.5M in lower middle market transactions.
Independent sponsor acquisitions combine equity raised for a specific transaction with acquisition debt. Seller rollover equity, seller notes, or mezzanine financing may also form part of the capital structure.
Under the independent sponsor model, sometimes called the fundless sponsor model, capital is raised deal by deal. The financing plan covers the purchase price, transaction expenses, and the business’s working capital and post-close liquidity requirements.
Relationships with capital providers can begin before a live transaction. Deal-specific discussions become more productive once the sponsor can share an investment thesis, target company, proposed structure, and expected equity requirement.
Once a transaction is under LOI, investor diligence and approvals need to progress alongside debt financing and acquisition documentation. Early agreement on sponsor economics, governance, and closing requirements helps avoid renegotiation late in the process.
Equity investors differ in their underwriting priorities. CapitalPad’s investment committee evaluates the business, the proposed capital structure, and the sponsor’s ability to execute the investment thesis. The review focuses on:
A lead equity investor generally anchors the equity raise and takes a central role in negotiating terms. Co-investors contribute additional equity under the agreed structure. Leading the financing does not necessarily mean holding a controlling ownership interest.
Governance is negotiated through board composition, consent rights, reporting requirements, and exit provisions. CapitalPad invests as a minority equity co-investor with customary minority investor protections and no board seats.
Independent sponsor economics generally include a transaction or closing fee, an ongoing management fee, and carried interest or promote. Negotiated terms also address the sponsor’s equity contribution and any closing fee rollover.
CapitalPad is flexible on sponsor economics and expects to invest on market-standard independent sponsor terms. Proposed fees, preferred returns, and promote are considered in the context of each transaction, with an emphasis on aligning sponsor incentives with investor outcomes.
An independent sponsor distribution waterfall governs how investment proceeds are allocated between investors and the sponsor. Many structures give investors priority for return of capital and any preferred return, with the sponsor participating through carried interest above negotiated hurdles.
Promote tiers may use MOIC or IRR hurdles, with negotiated catch-up provisions. The hurdle definitions and catch-up mechanics can produce different allocations even when transactions have the same headline promote percentage.
Sponsors should look for an equity partner whose check size, investment process, and governance expectations fit the transaction. Familiarity with independent sponsor economics, clear feedback, and direct communication matter throughout diligence and closing.
CapitalPad reviews transactions through a three-person investment committee and provides initial fit feedback within two to three business days. Sponsors work directly with the CapitalPad team through diligence, documentation, funding, and post-close administration. CapitalPad participates as a minority equity partner, while the sponsor leads the transaction and operating plan.