Independent financial sponsors face a unique challenge in today’s competitive M&A landscape. Proving their legitimacy to sellers, investors, and lenders is critical, and without the institutional backing of a private equity fund, the task is twice as challenging. The strength of your deal thesis is essential, but so is your team and execution. This is where Jackson CFO steps in—not just as a provider of Quality of Earnings (QofE) reports, but as a fractional CFO team member who legitimizes your proposal and helps drive the transaction across the finish line.
What is an Independent Sponsor?
Before diving in, let’s clarify the independent sponsor model, which is gaining significant traction in the middle-market M&A space. An independent sponsor—often called a fundless sponsor—is typically an individual, small team, or entity that identifies and pursues acquisition opportunities without a pre-committed fund from investors. Unlike traditional private equity firms that raise large pools of capital upfront (e.g., $500 million or more), independent sponsors operate on a deal-by-deal basis. They source targets, conduct initial due diligence, negotiate terms, and then secure equity and debt financing from a network of high-net-worth individuals, family offices, or institutional partners specifically for that transaction.
This model offers flexibility and lower overhead, making it ideal for niche or middle-market deals (typically $10M-$200M in enterprise value). Sponsors leverage their industry expertise—often from prior roles as executives or operators—to spot undervalued businesses and drive post-acquisition growth. However, the trade-off is risk: funding isn’t guaranteed, and success hinges on personal networks and compelling deal narratives.
In 2025, independent sponsors are reshaping the landscape, emerging as a force in a sluggish market where large deals face credit and valuation hurdles. They’re becoming more sophisticated, with increased prevalence in sectors like manufacturing and distribution. At Jackson CFO, we’ve worked with sponsors on deals like these, providing the financial backbone to turn opportunities into wins.
What is a Quality of Earnings (QofE)?
A credible, investor-ready QofE is no longer optional—it’s a fundamental part of the diligence process, scrutinized not just for accuracy but for strategic insight. But what exactly is a QofE, and why does it matter so much for independent sponsors?
At its core, a Quality of Earnings report is an in-depth analysis of a target company’s financial statements to evaluate the sustainability and quality of its earnings. It goes beyond standard audits or financial reviews by normalizing historical results to reflect what future performance might look like under new ownership. This involves adjusting for non-recurring items, owner-specific expenses, and other anomalies to present a “true” picture of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
Key components include:
- EBITDA Normalization: Identifying and adjusting for one-time events (e.g., legal settlements or unusual bonuses) or non-operating income to show recurring profitability. For instance, in a recent engagement, we uncovered a 10% EBITDA overstatement due to unrecorded liabilities, preventing a sponsor from overpaying.
- Cash Flow Sustainability: Analyzing free cash flow trends, working capital requirements, and capital expenditure needs to ensure the business can generate cash post-close without surprises.
- Risk Assessments: Diving into revenue concentrations (e.g., top customers accounting for 40% of sales), margin volatility, and operational inefficiencies that could erode value.
- Forward-Looking Insights: Projecting normalized earnings and identifying growth levers, often using tools like scenario modeling.
This isn’t just compliance; it’s a strategic tool that uncovers risks, validates adjustments, clarifies working capital trends, highlights customer and margin concentrations, detects cash flow sustainability post-close, and helps smooth the transaction and transition.
Not Just Accountants. Business Partners.
Jackson CFO brings more than spreadsheets and analysis—we bring operational fluency. As former owners and executives, we’ve sat on both sides of the table: buying, building, and exiting companies ourselves. That perspective allows us to position the deal in a way that resonates with capital providers who are looking beyond just accounting.
Legitimizing the Independent Sponsor
Independent sponsors often carry a perceived gap: “Can they really operate this business post-close?” Jackson CFO closes that gap. We stand shoulder-to-shoulder with you—not just during diligence, but throughout the transaction and beyond—presenting your investment case with credibility and competence.
- To Lenders: We provide clarity around forecasts, covenants, and capital structure.
- To Investors: We validate the upside story, confirm use of funds, and ensure professional reporting discipline.
- To Sellers: We offer confidence that the business will transition smoothly and professionally.
When Jackson CFO is in the room, stakeholders see a seasoned financial executive—not just a hired gun, but a strategic ally committed to the deal’s success.
Financial Infrastructure That Builds Confidence
Beyond analysis, we embed ourselves in the company’s financial backbone—providing stability and transparency during a critical period. We oversee:
- Accounting Systems: Ensuring system integrity, consistency, and audit readiness.
- Financing Processes: From lender coordination to working capital optimization.
- Reporting Infrastructure: Building timely, investor-grade dashboards and reports that stand up to scrutiny.
We ensure that post-close operations are as professional and disciplined as your investment thesis—positioning you for confident ownership, future capital raises, and eventual exit.
If you’re an independent sponsor looking to close your next deal with confidence and credibility, Jackson CFO is more than a QofE provider—we’re your embedded finance team. Let us help you tell the story, prove the upside, and earn the trust of investors, lenders, and sellers alike—before, during, and after the transaction. Contact us today at for a free consultation or to discuss embedding a fractional CFO in your next deal.