Capital raise · Vertical SaaS

Independent Sponsor Management Fee Structuring in Vertical SaaS

When the deal is vertical SaaS 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 $200M EV EBITDA $2M to $30M (or run-rate ARR) Audience Independent Sponsor
The deal context

An independent sponsor closing vertical SaaS transactions in the $10M to $200M EV range has a defined set of moves at the Management Fee Structuring stage. Most of them are not in a generic M&A textbook.

The typical vertical SaaS platform sits at $10M to $200M EV with EBITDA in the $2M to $30M (or run-rate ARR) range. The thesis runs on platform plus adjacent module acquisitions inside a single end-market. The ARR number on the CIM is rarely the ARR number on the closing balance sheet. Reconcile early.

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 vertical SaaS, layer in ARR bridge built before LOI signing 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.

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.

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 vertical SaaS 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.