Home Services Deals: Earnout Structures Done Right
Structuring Earnout Structures on home services deals, with the structure protection and capital connectivity an independent sponsor actually needs.
The economics on a home services platform deal usually hinge on a handful of structural decisions. Earnout Structures is one of them.
The typical home services platform sits at $8M to $80M EV with EBITDA in the $2M to $15M range. The thesis runs on regional roll-ups of HVAC, plumbing, and electrical operators. The cleanest home services deals close in 60 days from LOI. The mess is almost always in the licenses, not the financials.
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 home services, layer in working capital peg that survives a slow February 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.
The capital that opens up post-close, from refinancing to growth equity to strategic exit, runs through a small set of Wall Street relationships. That network is built in.
Related deal pages.
LOI Negotiation for Home Services
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Independent Sponsor Economics for Home Services
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for Home Services
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for Home Services
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Earnout Structures for Healthcare Services
roll-up of physician practices and ancillary service lines
Earnout Structures for Precision Manufacturing
platform plus tuck-in machine shops or aerospace-qualified shops
Earnout Structures for Home Services, on independent sponsor terms.
Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.