Close · Healthcare Services

Independent Sponsor Mezzanine Debt & Capital Stack in Healthcare Services

Securities and M&A counsel for independent sponsors structuring healthcare services transactions, from LOI to close to the capital markets that open up afterward.

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

Healthcare Services deals in the lower middle market run a specific playbook. Mezzanine Debt & Capital Stack is where the structure either holds or starts to leak.

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 Mezzanine Debt & Capital Stack actually gets structured.

  1. Target senior leverage at 3.0x to 3.5x EBITDA, mezzanine at 1.0x to 1.5x on top.

  2. Negotiate an intercreditor agreement that does not throttle the operator.

  3. Structure mezzanine with PIK toggle and warrants priced into the IRR model.

  4. Confirm covenant headroom of at least 20 percent at close.

  5. In healthcare services, layer in PC/MSO structuring as part of the Mezzanine Debt & Capital Stack workstream.

The common mistake

Letting the lender pick the intercreditor terms. Those terms decide what the operator can do on day 180.

Jason's take
"The capital stack is a contract, not a spreadsheet. Read every page of every term sheet."
Jason Powell · Mezzanine Debt & Capital Stack
Capital after close

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.

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

Bring the healthcare services deal. Get Mezzanine Debt & Capital Stack 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.