Aerospace & Defense Deals: Earnout Structures Done Right
Independent sponsor counsel for aerospace and defense, focused on Earnout Structures and the deal mechanics that protect sponsor economics and LP alignment.
An independent sponsor closing aerospace and defense transactions in the $15M to $200M EV range has a defined set of moves at the Earnout Structures stage. Most of them are not in a generic M&A textbook.
The typical aerospace and defense platform sits at $15M to $200M EV with EBITDA in the $3M to $30M range. The thesis runs on tier-two or tier-three supplier consolidation with certifications as moat. Foreign LP capital can trigger CFIUS review on the cleanest of deals. Map the cap table early.
How Earnout Structures actually gets structured.
Tie the earnout to gross profit or contribution margin, not revenue, to avoid sandbagging.
Cap the earnout window at 24 months. Anything longer is a litigation risk.
Build acceleration on a change of control or buyer-driven operational change.
Name an arbitrator and the accounting standard in the agreement.
In aerospace and defense, layer in ITAR / EAR registration transferred or refiled before close as part of the Earnout Structures workstream.
Drafting the earnout in three paragraphs. Earnouts are the second-most-litigated provision in M&A.
"If the earnout could be measured by a teenager with a spreadsheet, you wrote it well."Jason Powell · Earnout Structures
The deal is one thing. The capital that opens up after close is another.
After close, the call list for refinancing, recapitalization, and growth equity gets short and known. Jason carries that list.
Related deal pages.
LOI Negotiation for Aerospace & Defense
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Independent Sponsor Economics for Aerospace & Defense
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for Aerospace & Defense
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for Aerospace & Defense
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Earnout Structures for Healthcare Services
roll-up of physician practices and ancillary service lines
Earnout Structures for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
Bring the aerospace and defense deal. Get Earnout Structures done right.
Direct counsel from a securities and M&A attorney with billions in structured transactions, the independent-sponsor-native playbook, and the capital markets network that opens up post-close.