Independent Sponsor Co-Investment Rights in IT Services & MSPs
When the deal is IT services and MSPs and the question is Co-Investment Rights, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.
IT Services & MSPs deals in the lower middle market run a specific playbook. Co-Investment Rights is where the structure either holds or starts to leak.
The typical IT services and MSPs platform sits at $8M to $100M EV with EBITDA in the $2M to $18M range. The thesis runs on MSP platform with regional or vertical-specific bolt-ons. An MSP at 70% recurring revenue trades at one multiple, at 90% trades at a different one. The mix is the deal.
How Co-Investment Rights actually gets structured.
Define co-invest rights pro-rata to the LP's deal commitment.
Build a 30-day decision window so the deal does not stall.
Limit co-invest fees and carry, if any, to reflect the relationship value.
Document the right in the LPA, not in a side letter.
In IT services and MSPs, layer in MSA assignment review with carve-outs noted as part of the Co-Investment Rights workstream.
Granting unlimited co-invest. The next LP finds out and your firm economics suffer.
"Co-investment is a privilege you give to the LPs you want to keep. Define it accordingly."Jason Powell · Co-Investment Rights
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 IT Services & MSPs
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Independent Sponsor Economics for IT Services & MSPs
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for IT Services & MSPs
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for IT Services & MSPs
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Co-Investment Rights for Healthcare Services
roll-up of physician practices and ancillary service lines
Co-Investment Rights for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
An LOI on the desk, a IT services and MSPs target, and a Co-Investment Rights 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.