Syndication 101
GPs, sponsors, and syndicators. They’re all the same, right?
Wrong. While a sponsor and syndicator might occasionally be the GP, most of the time, these are totally separate entities. It’s important to understand the difference and the fees typically charged at each level. Also, understand the long-term interest in the underlying investment based on who is presenting the deal to you. At Accredited Status, we don’t promote deals but have extensive experience promoting, sponsoring, and executing investments for accredited investors. We’ve seen the good, bad, and ugly. Let’s get into it.
GPs or General Partners will usually hold the highest class of ownership, whether it’s stock or units. They are going to be in charge of making decisions, approving expenses, and will collect the most fees (promotion, management, etc.). GPs are critical to the success of any investment. You’re looking for trustworthy and competent organizations here.
Sponsors might be an extension of the GP but are strictly tasked with raising capital or handling some of the initial formation business tasks, while the GP focuses on executing the business or investment plan.
Syndications or syndicators are focused on presenting consistent deal flow to their investor base. They are expert marketers and prioritize growing their following over anything else. They are typically heavily compensated on the front-end of any deal they are promoting, which needs to be considered since they will likely still make money even if they invest in the deal and it fails (due to the upfront compensation based on their “finder’s fee”).
