We sat down with Eric Taylor, CEO and CIO, of Trident, to dive into their best practices for deal sourcing with Independent Sponsor partners. Read on for insights on these topics and more.

Q. What’s one emerging trend in deal sourcing that you believe is transforming the
industry right now?

To be direct, we believe the Independent Sponsor market is going to eat private equity alive, and we’ve tried to build a business at Trident that can grow with instead of opposed to this thesis. In private equity, the question is always how do you differentiate from other potential buyers. I can’t think of a better way to differentiate than independent sponsors and operators who have niche, subsector operating expertise, live close to the businesses they invest in (as opposed to us carpet-bagging New Yorkers), and can ingratiate themselves with business owners in other ways than a few Zoom calls.

One significant trend we are seeing is the rise of operational expertise winning over traditional non-operation private equity experience. There are plenty of strictly finance backgrounds running into the field, but I think over the long run the outperformers will be those that can most closely connect their operating experience to the actual growth levers themselves at the target company. Said more directly, I think it really helps to have personally managed and grown a business working for someone else before you go out and do it for yourself as an entrepreneur.

We at Trident tend to focus on the Independent Sponsors who themselves are former operators and supplement their leadership with value we believe we can bring the various opportunities we see. If you fit that bill give us a call!

Q. How do you align interests between you and independent sponsors you partner with?

At Trident, we believe that true partnership starts with a shared vision and a balanced economic structure. We structure our deals so that both Trident and the folks we partner with are incentivized not just for closing, but for long-term value creation. In our deals our partners are set to earn multiples of what one would earn through an upfront fee, assuming projections pan out. We also prioritize transparent communication from the outset, setting clear expectations around governance, capital allocation, and exit strategy. Our goal is to build relationships where both parties benefit over the life of the investment rather than just aligning incentives at closing. Ideally, we would work together on multiple deals over multiple Trident fund cycles once we build that trust and rapport.

Q. What factors make a deal particularly attractive to you in today’s market?

When reading an investment proposal, the one question on my mind is: Has our partner done it before, yes or no?

In today’s competitive landscape, we prioritize the obvious: deals that offer resilient cash flows, clear operational levers for growth with strong management teams, and a well-defined path to value creation. While industry tailwinds are always a plus, we are particularly drawn to businesses where we see a clear need to exist, but also inefficiency / underinvestment that can be corrected through strategic execution, namely bringing everyday small businesses to their next chapter of growth. These are all clear opportunities for professionalization, operational improvements, and digital transformation.

That being said, the consistent key for us is an operator with deep sector expertise and a clear link to the actual needs of the business from a value-creation perspective. When we see alignment there, we jump.

Trident’s approach to deal sourcing, partnership alignment, and value creation highlights the growing influence of Independent Sponsors in private equity. By prioritizing operational expertise and fostering long-term collaboration, Trident is redefining what successful investments look like in today’s market.

We’re thrilled to welcome Trident as a sponsor of the 18th Independent Sponsors Summit on March 4-5, 2025, in Miami. As a patient and thoughtful investment partner, Trident is committed to supporting independent sponsors and operator-led investments and aligning incentives to drive optimal outcomes. Don’t miss the opportunity to connect with them at the event!