Management Incentive Plans (MIP) for Insurance Brokerage Independent Sponsors
Independent sponsor counsel for insurance brokerage, focused on Management Incentive Plans (MIP) and the deal mechanics that protect sponsor economics and LP alignment.
An independent sponsor closing insurance brokerage transactions in the $10M to $150M EV range has a defined set of moves at the Management Incentive Plans (MIP) stage. Most of them are not in a generic M&A textbook.
The typical insurance brokerage platform sits at $10M to $150M EV with EBITDA in the $3M to $25M range. The thesis runs on regional retail agency roll-ups. Producer non-competes are unenforceable in too many states to ignore. Plan retention, not litigation.
How Management Incentive Plans (MIP) actually gets structured.
Size the MIP at 10 to 15 percent of post-close equity, with 60 percent time-vested and 40 percent performance-vested.
Use profits interests for tax efficiency, with a clear strike value at grant.
Build double-trigger acceleration on change of control plus termination.
Document the MIP in the LLC operating agreement, not in a separate plan only.
In insurance brokerage, layer in E&O tail insurance priced and bound as part of the Management Incentive Plans (MIP) workstream.
Promising the MIP percentage in the LOI without modeling the impact on the LP waterfall. The LP finds out and the deal stalls.
"MIPs are the cheapest retention tool you have. Use them deliberately, document them precisely."Jason Powell · Management Incentive Plans (MIP)
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.
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An LOI on the desk, a insurance brokerage target, and a Management Incentive Plans (MIP) 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.