Specialty Distribution Post-Close Cap Table Design: An Independent Sponsor's Counsel
Securities and M&A counsel for independent sponsors designing specialty distribution transactions, from LOI to close to the capital markets that open up afterward.
An independent sponsor closing specialty distribution transactions in the $10M to $100M EV range has a defined set of moves at the Post-Close Cap Table Design stage. Most of them are not in a generic M&A textbook.
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 Post-Close Cap Table Design actually gets structured.
Reserve a 10 to 15 percent management incentive pool, vesting on time and performance.
Document profits interests in the LLC operating agreement with a clear strike value.
Build anti-dilution mechanics for the rolled-equity sellers, narrowly.
Plan for add-on equity issuances with pre-approved dilution mechanics.
In specialty distribution, layer in supplier reaffirmation letters before LOI signs as part of the Post-Close Cap Table Design workstream.
Designing the cap table for day one only. The cap table you sign at close is the cap table you live with through year five.
"Cap tables are forecasts. Build them for the deal you want in year five, not the deal you signed in week one."Jason Powell · Post-Close Cap Table Design
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.
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Post-Close Cap Table Design 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.