Quality of Earnings for Specialty Distribution Independent Sponsors
When the deal is specialty distribution and the question is Quality of Earnings, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.
The economics on a specialty distribution platform deal usually hinge on a handful of structural decisions. Quality of Earnings is one of them.
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 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 specialty distribution, layer in supplier reaffirmation letters before LOI signs 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.
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.
Related deal pages.
Independent Sponsor Economics for Specialty Distribution
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
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…
Transaction Fee Structuring for Specialty Distribution
The fee paid at closing to the independent sponsor for sourcing, structuring, and closing the platform deal a…
Equity Rollover for Specialty Distribution
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
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Quality of Earnings for Home Services
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Quality of Earnings 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.