Independent Sponsor Economics for Specialty Distribution Independent Sponsors
Independent sponsor counsel for specialty distribution, focused on Independent Sponsor Economics and the deal mechanics that protect sponsor economics and LP alignment.
Independent Sponsor Economics on specialty distribution deals is one of those workstreams that looks routine on a checklist and decides outcomes in practice.
The typical specialty distribution platform sits at $10M to $100M EV with EBITDA in the $2.5M to $18M range. The thesis runs on vertical buy-up of niche product distributors. Most distribution multiples are wrong by half a turn until the rebate accounting gets normalized.
How Independent Sponsor Economics actually gets structured.
Anchor on 20 to 25 percent carry above an 8 percent preferred return, with a 50/50 catch-up.
Set the management fee at 2 percent of invested capital, capped at three years.
Charge a transaction fee of 2 to 3 percent at close, with a clear LP-approval ceiling.
Document the waterfall in the LPA, not in a side letter.
In specialty distribution, layer in supplier reaffirmation letters before LOI signs as part of the Independent Sponsor Economics workstream.
Negotiating economics with the LP only after the LOI is signed. By then, the leverage is gone.
"If you are an independent sponsor, your economics are your firm. Defend them in the LPA, not in conversation."Jason Powell · Independent Sponsor Economics
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.
LOI Negotiation for Specialty Distribution
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Management Fee Structuring for Specialty Distribution
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for Specialty Distribution
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Earnout Structures for Specialty Distribution
Deferred purchase price contingent on post-close performance, used to bridge buyer-seller valuation gaps.
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roll-up of physician practices and ancillary service lines
Independent Sponsor Economics for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
Independent Sponsor Economics for Specialty Distribution, 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.