Control, Alignment and Choosing the Right Capital Partner: A Conversation with Mike Palm
The question is not simply whether capital is available, but whether it is the right capital for the deal.
For independent sponsors and capital providers, that comes down to control, alignment, accountability and what each side is expected to bring beyond funding. Mike Palm, Partner at Charter Growth Capital, shares his perspective on how those dynamics play out in practice, what matters beyond the term sheet, and how both sides can assess whether a partnership is the right fit for the life of the investment.
Ahead of the Independent Sponsors Summit in New York, Mike Palm, Partner at Charter Growth Capital, shares his perspective on control versus non-control capital, the importance of alignment, and why securing a term sheet is only one part of choosing the right capital partner.
Your panel will explore control versus non-control capital models. Why is this such an important conversation for independent sponsors right now?
It is critical because, ultimately, “the buck” needs to stop with someone. In almost all our investments, the independent sponsor is responsible for setting the company’s direction. This is particularly important in the lower middle market, where someone needs to drive the growth plan and ensure the business continues progressing. As a mezzanine and equity fund, being the control investor in every company is not our model, so clarity around leadership, accountability and alignment is essential.
With more capital options available to sponsors than ever before, what makes this an especially interesting time to have this discussion?
More capital increases the likelihood that financing can be found for almost any transaction. However, amid higher interest rates, greater emphasis on value creation and potential macroeconomic headwinds, not every source of capital is well suited to every deal. The question is no longer simply whether capital is available, but whether it is the right capital for the business, the transaction and the sponsor’s objectives.
Without giving too much away, what is one misconception about capital partnerships that you believe is worth challenging?
In many independent sponsor transactions, most of the capital comes from one outside party or a syndicate rather than from the sponsor itself. It is important to remember where the capital enabling the deal to close is coming from and what that partner contributes beyond funding. There is much more to a capital partnership than the terms outlined in a term sheet.
What do you hope independent sponsors in the audience will think about differently after your session?
Even at the lower end of the lower middle market, the independent sponsor model should not be viewed as an easy “path to Wall Street,” as it has sometimes been portrayed. Experienced sponsors already understand the complexity involved. Equally, particularly in the lower middle market, not every deal that reaches the LOI stage is necessarily suited to institutional capital. Sponsors need to assess that fit carefully rather than assuming institutional backing is the natural next step.
What are you personally most looking forward to discussing—or hearing others’ perspectives on—at this year’s Summit?
I am looking forward to meeting strong independent sponsors and learning about the interesting investment opportunities seeking the collaborative capital approach that Charter Growth provides.
About the Interviewee
Mike Palm brings over 20 years of experience in finance and investing to his role as a Partner of Charter Capital. He oversees the firm’s day-to-day operations and serves on the investment committees for Charter Capital’s funds. Mike leverages his deep private equity background to source, structure and close investments, while also providing strategic guidance to portfolio companies as they grow after joining the portfolio.
Before joining Charter Capital, Mike was Vice President at Driehaus Private Equity in Chicago, where he played a key role in identifying, evaluating and executing investments, as well as managing the firm’s portfolio companies. As the first hire beyond the founding team, Mike helped shape the firm’s early growth and continues to serve the firm as an advisor.
Previously, Mike was an Associate at Beecken Petty O’Keefe & Company, a middle-market private equity firm focused on healthcare services. There, he concentrated on investments in practice management, HCIT, insurance services and medical products. He began his career in investment banking at CRT Capital Group in Stamford, Connecticut, supporting clients across healthcare, TMT and restructuring verticals.
Mike currently serves on the boards of Innoplast, Malley’s and Mitten, and is a board observer for Keystone Solutions Group and National Irrigation Services. He is a former board member of Energy Distribution Partners, focus4media, GrowthPlay and Chicago Switchboard (now Sparkstone). He also serves as Vice President of Phi Sigma Kappa Properties, the national housing corporation of his college fraternity.
A native of Grand Rapids, Michigan, Mike now lives in East Grand Rapids with his wife, two children and their (relatively) reliable retriever, Ella. In his free time, he enjoys golf, skiing, soccer, running (only with music) and whatever activities his kids are currently into.
