Capital raise · Specialty Distribution

Specialty Distribution Management Fee Structuring: An Independent Sponsor's Counsel

When the deal is specialty distribution and the question is Management Fee Structuring, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.

EV range $10M to $100M EV EBITDA $2.5M to $18M Audience Independent Sponsor
The deal context

Every specialty distribution acquisition has its own gravity. Management Fee Structuring is the workstream where independent sponsor counsel earns the seat.

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.

The moves

How Management Fee Structuring actually gets structured.

  1. Set the fee at 2 percent of invested capital, stepping to 1.5 percent after year three.

  2. Carve out portfolio-company services so add-on diligence is reimbursable.

  3. Allow accrual if cash flow does not support payment, with later cash catch-up.

  4. Make the fee subordinate to debt service, not to LP preferred return.

  5. In specialty distribution, layer in supplier reaffirmation letters before LOI signs as part of the Management Fee Structuring workstream.

The common mistake

Pricing the fee on enterprise value instead of invested capital. EV-based fees punish you on the first add-on.

Jason's take
"The management fee pays for the firm. Underprice it and you will run a hobby, not a platform."
Jason Powell · Management Fee Structuring
Capital after close

The deal is one thing. The capital that opens up after close is another.

Most independent sponsors solve the closing capital and then run into the post-close capital problem alone. The capital markets relationships that matter at month 18 are part of this practice.

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 distribution target, and a Management Fee Structuring 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.