Independent Sponsor Quality of Earnings in Marketing Agencies
Coordinating Quality of Earnings on marketing agencies deals, with the structure protection and capital connectivity an independent sponsor actually needs.
Marketing Agencies deals in the lower middle market run a specific playbook. Quality of Earnings is where the structure either holds or starts to leak.
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 Quality of Earnings actually gets structured.
Engage QofE within five business days of LOI signing.
Scope to include working capital normalization, deferred revenue, and customer concentration.
Share preliminary findings with the seller before final report, to surface disputes early.
Coordinate QofE findings into both the purchase agreement and the LP commitment package.
In marketing agencies, layer in client roster scrubbed for top-five concentration as part of the Quality of Earnings workstream.
Treating QofE as a back-office exercise. It is the basis for the price, the working capital peg, and the LP pitch.
"The QofE is the deal book. Read it twice before you negotiate anything."Jason Powell · Quality of Earnings
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.
Independent Sponsor Economics for Marketing Agencies
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for Marketing Agencies
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Transaction Fee Structuring for Marketing Agencies
The fee paid at closing to the independent sponsor for sourcing, structuring, and closing the platform deal a…
Equity Rollover for Marketing Agencies
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Quality of Earnings for Healthcare Services
roll-up of physician practices and ancillary service lines
Quality of Earnings for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
An LOI on the desk, a marketing agencies target, and a Quality of Earnings 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.