Capital raise · Healthcare Services

Healthcare Services Management Fee Structuring: An Independent Sponsor's Counsel

Independent sponsor counsel for healthcare services, focused on Management Fee Structuring and the deal mechanics that protect sponsor economics and LP alignment.

EV range $15M to $120M EV EBITDA $3M to $20M Audience Independent Sponsor
The deal context

Management Fee Structuring on healthcare services deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.

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.

The moves

How Management Fee Structuring actually gets structured.

  1. Set the fee at 2 percent of invested capital, stepping to 1.5 percent after year three.

  2. Carve out portfolio-company services so add-on diligence is reimbursable.

  3. Allow accrual if cash flow does not support payment, with later cash catch-up.

  4. Make the fee subordinate to debt service, not to LP preferred return.

  5. In healthcare services, layer in PC/MSO structuring as part of the Management Fee Structuring workstream.

The common mistake

Pricing the fee on enterprise value instead of invested capital. EV-based fees punish you on the first add-on.

Jason's take
"The management fee pays for the firm. Underprice it and you will run a hobby, not a platform."
Jason Powell · Management Fee Structuring
Capital after close

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.

MONTH 18
Senior refi
MONTH 24
Dividend recap
MONTH 36
Growth equity
YEAR 4–5
Strategic exit
TALK TO JASON

An LOI on the desk, a healthcare services target, and a Management 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.