Three numbers on the LOI.

Three numbers I want on the LOI before I let it leave the desk.

The carry. The management fee. The transaction fee.

Not in a side letter. Not in a footnote. Not "to be discussed at LPA stage." On the LOI itself, in the section that defines the sponsor's role and economics.

The conventional wisdom is that the LOI is between the buyer and the seller. The sponsor's economics with the LP are a separate conversation that happens between the LOI signing and the LPA closing. So the LOI does not need to address them. That is wrong.

The LOI sets the buyer's identity, structure, and economics with the seller. If the LOI is silent on the sponsor's economics with the LP, the seller (or the seller's banker) starts asking questions. "Who is your capital partner? How much equity are they putting up? What is your stake in the deal?" Those questions are reasonable. They are also questions that the independent sponsor is going to have to answer, on the spot, without the leverage of having structured the LP conversation first.

If the LOI has the three numbers on it, the independent sponsor shows up to every subsequent meeting with the seller, the lender, the QofE provider, and the eventual LP, with the economics already framed. Anyone who tries to renegotiate them is renegotiating against the signed LOI, not against a verbal pitch.

If the LOI does not have the three numbers, the independent sponsor is negotiating in three rooms simultaneously, with three different counterparties, and the economics drift. Each room takes a small bite. The carry drifts down half a point. The transaction fee gets capped. The management fee gets renegotiated in the LPA. By the time the deal closes, the firm economics are 15 to 25 percent worse than the independent sponsor pitched themselves on day one.

Section 1: parties. Identify the buyer entity as a sponsor-led acquisition vehicle. Section 2: structure. Describe the deal-by-deal capital model briefly. Section 3: sponsor economics. List the three numbers with a short note that they are "as customary for independent sponsor transactions of this size." Section 4 onward: the usual LOI terms.

LOI economics travel. Make them travel.