Healthcare Services Deals: Earnout Structures Done Right
Independent sponsor counsel for healthcare services, focused on Earnout Structures and the deal mechanics that protect sponsor economics and LP alignment.
An independent sponsor closing healthcare services transactions in the $15M to $120M 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 healthcare services platform sits at $15M to $120M EV with EBITDA in the $3M to $20M range. The thesis runs on roll-up of physician practices and ancillary service lines. Most off-market healthcare deals come through advisors who have seen the structure before. Have one in your call list.
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 healthcare services, layer in PC/MSO structuring 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.
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.
LOI Negotiation for Healthcare Services
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Independent Sponsor Economics for Healthcare Services
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for Healthcare Services
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for Healthcare Services
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Earnout Structures for Home Services
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Earnout Structures for Precision Manufacturing
platform plus tuck-in machine shops or aerospace-qualified shops
Bring the healthcare services 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.