Diligence · Vertical SaaS

Vertical SaaS Quality of Earnings: An Independent Sponsor's Counsel

When the deal is vertical SaaS 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.

EV range $10M to $200M EV EBITDA $2M to $30M (or run-rate ARR) Audience Buy-side / Sponsor
The deal context

The economics on a vertical SaaS platform deal usually hinge on a handful of structural decisions. Quality of Earnings is one of them.

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 Quality of Earnings actually gets structured.

  1. Engage QofE within five business days of LOI signing.

  2. Scope to include working capital normalization, deferred revenue, and customer concentration.

  3. Share preliminary findings with the seller before final report, to surface disputes early.

  4. Coordinate QofE findings into both the purchase agreement and the LP commitment package.

  5. In vertical SaaS, layer in ARR bridge built before LOI signing as part of the Quality of Earnings workstream.

The common mistake

Treating QofE as a back-office exercise. It is the basis for the price, the working capital peg, and the LP pitch.

Jason's take
"The QofE is the deal book. Read it twice before you negotiate anything."
Jason Powell · Quality of Earnings
Capital after close

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.

MONTH 18
Senior refi
MONTH 24
Dividend recap
MONTH 36
Growth equity
YEAR 4–5
Strategic exit
WORK WITH JASON

Bring the vertical SaaS deal. Get Quality of Earnings 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.