Auto Aftermarket Deals: Quality of Earnings Done Right
Independent sponsor counsel for auto aftermarket, focused on Quality of Earnings and the deal mechanics that protect sponsor economics and LP alignment.
Quality of Earnings on auto aftermarket deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.
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.
How Quality of Earnings actually gets structured.
Engage QofE within five business days of LOI signing.
Scope to include working capital normalization, deferred revenue, and customer concentration.
Share preliminary findings with the seller before final report, to surface disputes early.
Coordinate QofE findings into both the purchase agreement and the LP commitment package.
In auto aftermarket, layer in technician retention pool defined and funded as part of the Quality of Earnings workstream.
Treating QofE as a back-office exercise. It is the basis for the price, the working capital peg, and the LP pitch.
"The QofE is the deal book. Read it twice before you negotiate anything."Jason Powell · Quality of Earnings
The deal is one thing. The capital that opens up after close is another.
Refinancing, recaps, growth rounds, and the right strategic conversation eighteen months early are all downstream of relationships that take years to build and minutes to use.
Related deal pages.
Independent Sponsor Economics for Auto Aftermarket
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for Auto Aftermarket
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Transaction Fee Structuring for Auto Aftermarket
The fee paid at closing to the independent sponsor for sourcing, structuring, and closing the platform deal a…
Equity Rollover for Auto Aftermarket
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
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Quality of Earnings for Home Services
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An LOI on the desk, a auto aftermarket target, and a Quality of Earnings question worth a real conversation.
Twenty minutes of practitioner-grade input from a securities attorney whose first move is to read the deal, not the engagement letter.