Independent Sponsor Working Capital Adjustments in Specialty Distribution
When the deal is specialty distribution and the question is Working Capital Adjustments, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.
Specialty Distribution deals in the lower middle market run a specific playbook. Working Capital Adjustments is where the structure either holds or starts to leak.
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 Working Capital Adjustments actually gets structured.
Set the peg based on a trailing 12-month average, normalized for seasonality.
Define each line item in the schedule, especially deferred revenue and accrued vacation.
Cap the dispute resolution timeline at 30 days post-close.
Build a true-up payment mechanism funded out of escrow.
In specialty distribution, layer in supplier reaffirmation letters before LOI signs as part of the Working Capital Adjustments workstream.
Using an unadjusted average that ignores seasonality. You pay twice for the same cash.
"Working capital is where deals are won or re-traded after LOI. Read every line of the schedule."Jason Powell · Working Capital Adjustments
The deal is one thing. The capital that opens up after close is another.
The capital that opens up post-close, from refinancing to growth equity to strategic exit, runs through a small set of Wall Street relationships. That network is built in.
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…
Representation & Warranty Insurance for Specialty Distribution
A buyer-side insurance product covering breach of seller representations, reducing seller escrow and indemnit…
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.
Working Capital Adjustments for Healthcare Services
roll-up of physician practices and ancillary service lines
Working Capital Adjustments for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
An LOI on the desk, a specialty distribution target, and a Working Capital Adjustments 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.