Wealth Advisors & RIAs Earnout Structures: An Independent Sponsor's Counsel
When the deal is wealth advisors and RIAs and the question is Earnout Structures, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.
The economics on a wealth advisors and RIAs platform deal usually hinge on a handful of structural decisions. Earnout Structures is one of them.
The typical wealth advisors and RIAs platform sits at $10M to $180M EV with EBITDA in the $3M to $25M range. The thesis runs on RIA aggregation or wealth platform roll-up. Client consent process is the longest pole. Start it the day after the LOI signs.
How Earnout Structures actually gets structured.
Tie the earnout to gross profit or contribution margin, not revenue, to avoid sandbagging.
Cap the earnout window at 24 months. Anything longer is a litigation risk.
Build acceleration on a change of control or buyer-driven operational change.
Name an arbitrator and the accounting standard in the agreement.
In wealth advisors and RIAs, layer in negative consent process timed with regulators as part of the Earnout Structures workstream.
Drafting the earnout in three paragraphs. Earnouts are the second-most-litigated provision in M&A.
"If the earnout could be measured by a teenager with a spreadsheet, you wrote it well."Jason Powell · Earnout Structures
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.
LOI Negotiation for Wealth Advisors & RIAs
The 4 to 8 page agreement that frames the deal economics, exclusivity, and diligence period.
Independent Sponsor Economics for Wealth Advisors & RIAs
The package of deal-by-deal carry, management fees, and transaction fees that compensates the independent spo…
Management Fee Structuring for Wealth Advisors & RIAs
The annual fee paid by the deal entity to the independent sponsor for ongoing oversight, board service, and p…
Equity Rollover for Wealth Advisors & RIAs
The portion of seller proceeds reinvested into the post-close entity, aligning seller with buyer.
Earnout Structures for Healthcare Services
roll-up of physician practices and ancillary service lines
Earnout Structures for Home Services
regional roll-ups of HVAC, plumbing, and electrical operators
An LOI on the desk, a wealth advisors and RIAs target, and a Earnout Structures 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.