Capital raise · Specialty Chemicals

Independent Sponsor Economics for Specialty Chemicals Independent Sponsors

When the deal is specialty chemicals and the question is Independent Sponsor Economics, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.

EV range $15M to $200M EV EBITDA $3M to $28M Audience Independent Sponsor
The deal context

Specialty Chemicals deals in the lower middle market run a specific playbook. Independent Sponsor Economics is where the structure either holds or starts to leak.

The typical specialty chemicals platform sits at $15M to $200M EV with EBITDA in the $3M to $28M range. The thesis runs on niche formulator or contract manufacturing buy-up. The IP lives in the formulator's head as often as in the company. Structure for that risk explicitly.

The moves

How Independent Sponsor Economics actually gets structured.

  1. Anchor on 20 to 25 percent carry above an 8 percent preferred return, with a 50/50 catch-up.

  2. Set the management fee at 2 percent of invested capital, capped at three years.

  3. Charge a transaction fee of 2 to 3 percent at close, with a clear LP-approval ceiling.

  4. Document the waterfall in the LPA, not in a side letter.

  5. In specialty chemicals, layer in chemical inventory transfer filed as part of the Independent Sponsor Economics workstream.

The common mistake

Negotiating economics with the LP only after the LOI is signed. By then, the leverage is gone.

Jason's take
"If you are an independent sponsor, your economics are your firm. Defend them in the LPA, not in conversation."
Jason Powell · Independent Sponsor Economics
Capital after close

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.

MONTH 18
Senior refi
MONTH 24
Dividend recap
MONTH 36
Growth equity
YEAR 4–5
Strategic exit
TALK TO JASON

An LOI on the desk, a specialty chemicals target, and a Independent Sponsor Economics 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.