LOI · Auto Aftermarket

Equity Rollover for Auto Aftermarket Independent Sponsors

Structuring Equity Rollover on auto aftermarket deals, with the structure protection and capital connectivity an independent sponsor actually needs.

EV range $8M to $90M EV EBITDA $2M to $16M Audience Buy & Sell-side
The deal context

An independent sponsor closing auto aftermarket transactions in the $8M to $90M EV range has a defined set of moves at the Equity Rollover stage. Most of them are not in a generic M&A textbook.

The typical auto aftermarket platform sits at $8M to $90M EV with EBITDA in the $2M to $16M range. The thesis runs on service-center or specialty-shop regional roll-ups. Technician shortage is the single biggest valuation risk. Underwrite the bench, not the bays.

The moves

How Equity Rollover actually gets structured.

  1. Anchor on 15 to 25 percent rollover for a clean alignment story.

  2. Treat rollover as tax-deferred under Section 351 or 721 where the structure allows.

  3. Document tag-along and drag-along rights at the rollover level, not just at the LP level.

  4. Cap exit veto rights for rolled equity to avoid future deadlock.

  5. In auto aftermarket, layer in technician retention pool defined and funded as part of the Equity Rollover workstream.

The common mistake

Rolling at the wrong entity level, triggering an immediate tax event on what was supposed to be deferred.

Jason's take
"Rollover is the cheapest alignment tool on the table. Use it; do not abuse it."
Jason Powell · Equity Rollover
Capital after close

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.

MONTH 18
Senior refi
MONTH 24
Dividend recap
MONTH 36
Growth equity
YEAR 4–5
Strategic exit
ENGAGE THE PRACTICE

Equity Rollover for Auto Aftermarket, on independent sponsor terms.

Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.