Independent Sponsor Dividend Recapitalization in IT Services & MSPs
Structuring Dividend Recapitalization on IT services and MSPs deals, with the structure protection and capital connectivity an independent sponsor actually needs.
An independent sponsor closing IT services and MSPs transactions in the $8M to $100M EV range has a defined set of moves at the Dividend Recapitalization stage. Most of them are not in a generic M&A textbook.
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 Dividend Recapitalization actually gets structured.
Time the recap when leverage has come down and EBITDA has grown.
Structure the new senior debt with room for ongoing operations and add-ons.
Confirm that the LP waterfall recognizes the distribution as recap, not exit.
Coordinate tax treatment of the distribution with the LPs in advance.
In IT services and MSPs, layer in MSA assignment review with carve-outs noted as part of the Dividend Recapitalization workstream.
Recapping too early. Lenders price it; LPs feel it; the next deal cost goes up.
"Recaps are a tool, not a habit. Use them when the operating story supports them."Jason Powell · Dividend Recapitalization
The deal is one thing. The capital that opens up after close is another.
After close, the call list for refinancing, recapitalization, and growth equity gets short and known. Jason carries that list.
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Dividend Recapitalization for IT Services & MSPs, 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.