Home Services Deals: Mezzanine Debt & Capital Stack Done Right
When the deal is home services and the question is Mezzanine Debt & Capital Stack, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.
Home 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 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 Mezzanine Debt & Capital Stack actually gets structured.
Target senior leverage at 3.0x to 3.5x EBITDA, mezzanine at 1.0x to 1.5x on top.
Negotiate an intercreditor agreement that does not throttle the operator.
Structure mezzanine with PIK toggle and warrants priced into the IRR model.
Confirm covenant headroom of at least 20 percent at close.
In home services, layer in working capital peg that survives a slow February as part of the Mezzanine Debt & Capital Stack workstream.
Letting the lender pick the intercreditor terms. Those terms decide what the operator can do on day 180.
"The capital stack is a contract, not a spreadsheet. Read every page of every term sheet."Jason Powell · Mezzanine Debt & Capital Stack
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.
Transaction Fee Structuring for Home Services
The fee paid at closing to the independent sponsor for sourcing, structuring, and closing the platform deal a…
Working Capital Adjustments for Home Services
The closing-date true-up that protects the buyer from receiving a business stripped of normal-course working …
Representation & Warranty Insurance for Home Services
A buyer-side insurance product covering breach of seller representations, reducing seller escrow and indemnit…
Indemnification for Home Services
The seller's contractual promise to compensate the buyer for breaches of representations, covenants, and spec…
Mezzanine Debt & Capital Stack for Healthcare Services
roll-up of physician practices and ancillary service lines
Mezzanine Debt & Capital Stack for Precision Manufacturing
platform plus tuck-in machine shops or aerospace-qualified shops
Bring the home 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.