Auto Aftermarket Deals: Transaction Fee Structuring Done Right
Securities and M&A counsel for independent sponsors structuring auto aftermarket transactions, from LOI to close to the capital markets that open up afterward.
An independent sponsor closing auto aftermarket transactions in the $8M to $90M EV range has a defined set of moves at the Transaction Fee Structuring 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.
How Transaction Fee Structuring actually gets structured.
Disclose the fee in the LP commitment letter and the LPA, with no surprises at close.
Set platform transaction fees at 2 to 3 percent of enterprise value, add-on fees at 1 to 2 percent.
Build an LP-approval threshold above which a one-time vote is required.
Treat the fee as a closing distribution, paid before working capital adjustments.
In auto aftermarket, layer in technician retention pool defined and funded as part of the Transaction Fee Structuring workstream.
Hiding the transaction fee in closing costs. LPs find it, and you lose the next deal.
"Charge the fee. Disclose the fee. Defend the fee. The LP either funds the model or does not."Jason Powell · Transaction Fee Structuring
The deal is one thing. The capital that opens up after close is another.
Most independent sponsors solve the closing capital and then run into the post-close capital problem alone. The capital markets relationships that matter at month 18 are part of this practice.
Related deal pages.
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An LOI on the desk, a auto aftermarket target, and a Transaction Fee Structuring 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.