Independent Sponsor Dividend Recapitalization in Marketing Agencies
Structuring Dividend Recapitalization on marketing agencies deals, with the structure protection and capital connectivity an independent sponsor actually needs.
The economics on a marketing agencies platform deal usually hinge on a handful of structural decisions. Dividend Recapitalization is one of them.
The typical marketing agencies platform sits at $5M to $80M EV with EBITDA in the $1.5M to $14M range. The thesis runs on specialty agency or holdco platform with bolt-ons. If the founder leaves, half the agencies in the market lose 25% of revenue. Structure for that.
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 marketing agencies, layer in client roster scrubbed for top-five concentration 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.
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.
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Indemnification for Marketing Agencies
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Bring the marketing agencies deal. Get Dividend Recapitalization 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.