Independent Sponsor Seller Financing in IT Services & MSPs
Structuring Seller Financing on IT services and MSPs deals, with the structure protection and capital connectivity an independent sponsor actually needs.
The economics on a IT services and MSPs platform deal usually hinge on a handful of structural decisions. Seller Financing is one of them.
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 Seller Financing actually gets structured.
Anchor seller notes at 5 to 15 percent of EV, with a 4 to 6 year term.
Subordinate explicitly to senior and mezzanine debt with a clear standstill on default.
Price interest at 6 to 8 percent, with cash pay or PIK depending on the senior package.
Build prepayment optionality so refinancing flexibility is preserved.
In IT services and MSPs, layer in MSA assignment review with carve-outs noted as part of the Seller Financing workstream.
Treating the seller note as a hand-shake. Sellers sue on notes more often than on equity disputes.
"A seller note is debt. Document it like debt. Service it like debt."Jason Powell · Seller Financing
The deal is one thing. The capital that opens up after close is another.
Capital after close is where the IRR actually gets made. The right introductions at month nine through month thirty are where this practice works as hard as it does at the LOI.
Related deal pages.
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Seller Financing 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.