On this episode of Still Searching with Jed Morris, independent sponsor Andrew Engram of Lightning Rod Capital breaks down what it actually takes to buy lower middle market companies when you raise capital deal by deal.

Andrew's road runs from walking on to the Texas A&M football team to managing offshore drilling projects in Scotland, Rotterdam, and Korea, to getting laid off in the oil crash and rebuilding through an MBA, a stack of VC rejections, and a co-founded boutique investment bank. Then he left to build his own firm. His first deal as a sponsor was a natural gas measurement company in West Texas. He spent eight months on it, talked to over 400 capital providers, found exactly one family office willing to move, and then watched performance fall off a cliff. He walked away carrying the diligence bill and the lessons.

Those lessons are the meat of this one. Do not try to win a banked auction as an independent sponsor. Do not underwrite peak EBITDA and call it normal. Know who runs the company post close before you fall in love with the deal. And remember the line Jed gives every buyer: you have a buy box, but lenders have a lend box.

A buyer walks away with: how the independent sponsor model really works, how to pressure test a deal with a personal board of advisors before going to market, and why capital raising is won in person, not over Zoom.

Full transcript: https://jedbmorris.com/podcast/independent-sponsor-lessons-andrew-engram

Watch on YouTube: https://www.youtube.com/watch?v=yQ7giA19G_E

Connect with Andrew Engram: https://www.linkedin.com/in/andrewengram19/