Specialty Distribution Representation & Warranty Insurance: An Independent Sponsor's Counsel
Securities and M&A counsel for independent sponsors structuring specialty distribution transactions, from LOI to close to the capital markets that open up afterward.
The economics on a specialty distribution platform deal usually hinge on a handful of structural decisions. Representation & Warranty Insurance 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 Representation & Warranty Insurance actually gets structured.
Get to non-binding indication within two weeks of LOI sign, with carrier diligence to follow.
Negotiate retention to 0.5 percent of EV, dropping to 0.25 percent after 12 months.
Confirm policy follows form on the purchase agreement, not the other way around.
Carve out tax indemnities and known liabilities, priced separately if needed.
In specialty distribution, layer in supplier reaffirmation letters before LOI signs as part of the Representation & Warranty Insurance workstream.
Treating R&W as a commodity. Carrier appetite varies sharply by industry and deal size.
"R&W is no longer optional on most independent sponsor deals over $20M. Price it into the LOI."Jason Powell · Representation & Warranty Insurance
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.
Transaction Fee Structuring for Specialty Distribution
The fee paid at closing to the independent sponsor for sourcing, structuring, and closing the platform deal a…
Working Capital Adjustments for Specialty Distribution
The closing-date true-up that protects the buyer from receiving a business stripped of normal-course working …
Indemnification for Specialty Distribution
The seller's contractual promise to compensate the buyer for breaches of representations, covenants, and spec…
Quality of Earnings for Specialty Distribution
The buyer's accounting diligence report normalizing earnings, working capital, and pro-forma performance.
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Bring the specialty distribution deal. Get Representation & Warranty Insurance done right.
Direct counsel from a securities and M&A attorney with billions in structured transactions, the independent-sponsor-native playbook, and the capital markets network that opens up post-close.