Engagement Letter, Buy Side Advisory, Ches Booker / Capstone Construction Partners

Engagement Letter, Buy Side Advisory

Ches Booker, Capstone Construction Partners | 2026-04-30

Ches,

What we heard

You want to buy four commercial reroof shops across the Midwest, roll them in with your book, run them sub only the way you already run yours, and exit at platform scale in three to four years. The targets are not on the internet. They are 2nd and 3rd generation operators in their late 50s and 60s, sitting on six to twenty four portfolio owner accounts that keep coming back because the roofer has been there for twenty years. That twenty year relationship is the asset you are buying, and it is the only thing that justifies the multiple.

What we’ll do

Build the target list ourselves across St. Louis, Chicago, Minneapolis, Indianapolis, Columbus, Cleveland, Cincinnati. We are hunting the off internet shops with portfolio owner accounts, not pulling a SIC code dump.
Run a 40 to 60 owner handwritten letter campaign. Two pitch tracks. One for the 65 year old who is done, one for the 47 year old who still has spunk. Names you would recognize. No shotgun.
Sit in on every seller call with you. You should not be the only one in the room reading the temperature, and a second operator voice on the line keeps the legacy preservation pitch honest.
Bring in additional partners such as Spiga Capital for debt, attorney, or other deal services partners.
Push back on you when the math drifts. The plan works at 4.0x blended; it breaks at 4.5x. We flag every deal that prices over the line and walk if it does not restructure.
Move fast. Tecta and Nations are buying this exact profile right now. Nations took Boone Brothers in your footprint in November. Every week of delay puts your seller into someone else’s envelope.

Pace

Speed is the differentiator. PE platforms are acquiring a U.S. roofing shop roughly every 48 hours; Tecta did six in 2025. Our cadence on your behalf: target list inside 14 days of signature, first letters in the mail by day 21, first qualified seller calls by day 45. If that cadence slips, your seller opens a Nations Roof envelope before you open the conversation.

Target Criteria

Service	Commercial reroof only. Replacements and recovers. Out: new construction, residential, new build TPO.
Roof system	Single ply (TPO / EPDM) on warehouses and industrial. Metal only when recovering existing metal. 20 year warranty single ply is 90%+ of the book.
EBITDA	$1.5M to $2.0M (ideal $2.0M). 10% to 20% EBITDA margin.
Deal value	$7M to $9M per target. 4.0x to 4.5x EBITDA, off market discipline. Hard cap 4.5x.
Geos	St. Louis, Chicago, Minneapolis, Indianapolis, Columbus, Cleveland, Cincinnati.
Labor model	Sub only, or sub heavy with a small in house crew (a few employees, couple trucks). Not a high volume bidding machine.
Client book	6 to 24 portfolio owner recurring accounts. Industrial and warehouse owners, often out of market, who trust the local roofer because he has been there. Off internet relationships.
Owner profile	Mid 50s to 60s, 2nd or 3rd generation. Mid 40s possible but harder. Key man earn out non negotiable. The relationships ride with him.

What we want, and what we don’t

Lots of shops will look like a fit on paper. The screen below is what keeps your dollars off the wrong target.

DO want	DON’T want
Asset light shop. Office, a couple of trucks, a foreman or two, and a Rolodex. Sub crews do the actual work.	Truck, equipment, and trailer fleet. A yard full of bucket trucks, kettles, lulls, dumpsters, and lowboys. Capex on wheels you would inherit, depreciate, insure, and replace.
6 to 24 named portfolio owner accounts who repeat every 5 to 12 years. Off internet relationships built on twenty years of phone calls.	Bid board churn. Shops that live on public bid GC work or BuildingConnected. No relationship asset, no repeat, no premium price.
Single-ply commercial reroof. TPO and EPDM on warehouses and light industrial. Predictable scope, repeatable margin.	Residential and storm chasers. Shingle work, hail markets, insurance driven volume, door to door sales orgs. Different business entirely.
Sub only or sub heavy. Headcount you can count on two hands. Field labor flexes with the schedule.	50+ W2 field employees. Union shop, prevailing wage, payroll burden, workers’ comp mod above 1.0. Margins evaporate the first slow quarter.
Owner who wants legacy preserved. Cares whether his name stays on the door and whether his foreman keeps his job.	Owner running a max price auction. Banked, Axial listed, or pitched by a sell side broker. The math breaks above 4.5x and we will not chase it.
Boring book of business. Same accounts, same scopes, predictable swings between Q2 and Q4.	One customer concentration risk. One GC, one big box account, or one PM driving more than 30% of revenue. When he leaves, the book leaves.
Clean books, accrual basis, reviewed financials. EBITDA we can defend to a lender with three months of work.	Cash basis, owner perks everywhere. Boat in the LLC, three trucks for the kids, a pile of personal expenses we cannot back out cleanly.
Mid 50s to 60s owner. Tired enough to sell, present enough for a 24 month earn out tied to relationship transfer.	Owner gone day one. Already retired, already absent, or refusing a key man earn out. The relationships do not survive the handoff.

Fee Structure, Three Options

Same scope of work. Three ways to pay for it. The difference is whether you put any cash up front. The more you commit at engagement, the lower the success rate at close.

	Option A. Performance Only	Option B. Balanced RECOMMENDED	Option C. Committed
Engagement fee	$0	$25K total, billed $8,300 / $8,300 / $8,400 over 3 months	$30K total, billed $5,000 / month over 6 months
Success fee per close	5.0% of transaction value, min $250K	4.0% of transaction value, min $225K	3.0% of transaction value, min $200K
At $6M close ($1.5M EBITDA × 4.0x)	$300K success fee	$240K success fee	$200K success fee (minimum applies; 3% = $180K)
All in, 4 closes at $6M	~$1.20M	~$985K	~$830K
Why the price moves	No upfront commitment from you. We carry all sourcing risk for the full engagement. The success rate compensates for that.	A modest engagement fee over 3 months buys the success rate down a full point. The default for a CFO who wants the math defensible.	Full 6 month engagement commitment buys the success rate to its floor. Lowest all in cost across the program.

The engagement fee is not a retainer. It is a fixed commitment billed in installments that lowers the success rate at close. More engagement fee upfront means lower total program cost, not higher. Reference: published 2024 to 2025 market data shows 4.8% average success fee on $5M deals, 3.4% on $20M deals. Our rates land squarely inside that band. Appendix A has full mechanics and three market references.

Detailed fee mechanics, market benchmarks, and standard terms appear in Appendix A on the next page.

If this reads right, sign below and we start the target list Monday. The fee option can be circled here or noted on Appendix A.

Selected option: ▢ A ▢ B ▢ C

Ewing Gillaspy

Next Chapter Advisory Group | 2026-04-30

Mark DeChant

Next Chapter Advisory Group | 2026-04-30

Ches Booker

Capstone Construction Partners | Date: ____________

APPENDIX AFee Mechanics, Worked Examples, and Standard Terms

Engagement Letter, Buy Side Advisory | Ches Booker, Capstone Construction Partners | 2026-04-30

The Pricing Logic

The engagement fee is not a retainer. It is a fixed commitment billed in installments that lowers the success rate at close. The more you commit at engagement, the lower the success rate, and the lower the total program cost. Option C costs less in total than Option A, even though more cash moves before the first close.

Industry benchmarks for a $6M deal ($1.5M EBITDA at 4.0x):

Original Lehman scale (1960, Lehman Brothers): 5/4/3/2/1 on $1M tranches, then 1% above $4M. On $6M = $160K, approximately 2.7% blended. The historic floor.
Double Lehman: 10/8/6/4/2. On $6M = $320K, approximately 5.3% blended. The middle market ceiling for sub $50M deals.
Published 2024 to 2025 market data: average success fee on a $5M deal is 4.8%. On a $20M deal it falls to 3.4%. Our rates of 5.0%, 4.0%, and 3.0% sit inside that band across the full range of options. Source: RoseBiz, “What Are M&A Advisor Fees in 2024–2025?”

All three options are priced within or below Double Lehman. The structure simply determines how the cost is distributed between engagement and close.

Option A. Performance Only

No engagement fee. We carry all sourcing risk for the full 6 month engagement and only get paid if a target closes.

Engagement fee: $0.
Success fee: 5.0% of transaction value, minimum $250K per close.
Worked example, $6M close: 5.0% × $6M = $300K. Minimum does not apply.
All in, four $6M closes: $1.20M.
Trade off: highest success rate because you give us no upfront commitment. Right call when you want to preserve cash until a deal confirms.

Option B. Balanced RECOMMENDED

A modest fixed engagement fee billed over 3 months buys the success rate down a full point. Standard middle market buy side structure, defensible line by line.

Engagement fee: $25,000 total. Billed as $8,300 in month one, $8,300 in month two, $8,400 in month three.
Success fee: 4.0% of transaction value, minimum $225K per close.
Worked example, $6M close: 4.0% × $6M = $240K. Minimum does not apply.
All in, four $6M closes: $25K engagement + $960K success = $985K.
Trade off: $215K less in total program cost than Option A. Engagement fee is billed whether or not a deal closes.

Option C. Committed

Full 6 month engagement commitment, lightest success rate, lowest all in cost across the program. For buyers who want to lock in the lowest possible success fee.

Engagement fee: $30,000 total. Billed as $5,000 per month over 6 months.
Success fee: 3.0% of transaction value, minimum $200K per close.
Worked example, $6M close: 3.0% × $6M = $180K. Minimum of $200K applies.
All in, four $6M closes: $30K engagement + $800K success (4 × $200K minimum) = $830K.
Trade off: lowest all in cost. Engagement fee billed across the full 6 months whether or not a deal closes. At smaller deal sizes the minimum success fee is the effective floor.

Side by Side Cash Flow, Four Closes at $6M Each

Cash bucket	Option A	Option B (rec.)	Option C
Engagement fee total	$0	$25K (3 installments)	$30K (6 installments of $5K)
Success fees, 4 closes	$1.20M (4 × $300K)	$960K (4 × $240K)	$800K (4 × $200K minimum)
All in program	$1.20M	$985K	$830K
Blended rate on $24M deployed	5.00%	4.10%	3.46%

Assumes four targets closed at $6M each ($1.5M EBITDA × 4.0x) over the 6 month engagement. Numbers move proportionally if deal size or count changes. All three options sit inside the published 3% to 5% buy side specialist band for deals in the $5M to $10M range.

Market References

Three independent sources confirming these rates are standard or below market for this deal size:

RoseBiz — “What Are M&A Advisor Fees in 2024–2025?”
Reports the average success fee on a $5M deal is 4.8%. Fixed engagement fees most commonly run $5,000 to $25,000. Our Option A at 5.0% sits just above the published average for deals of this size, consistent with the absence of any upfront commitment. Options B and C fall meaningfully below market average.
Axial — “M&A Fee Guide 2024–2025”
Surveyed 300+ M&A advisors. Finds 44% use the Lehman formula, 30% charge monthly fees alongside success fees. Notes that 57% of firms deduct some or all engagement fees from the final success fee — the industry is moving toward the exact structure here. Also reports that 30% of firms raised fees in 2024, making below-market structures increasingly rare.
MidStreet — “What Is the Double Lehman Scale?”
Explains the Double Lehman (10/8/6/4/2) as the standard for middle market transactions where deals take longer to close and require more sourcing work. On a $6M deal, Double Lehman produces a $320K success fee (5.3% blended). All three of our options price below Double Lehman at this deal size, including Option A at $300K.

Standard Terms

Term: 6 months from signature. Renewal by mutual written agreement.
Termination for convenience: Options B and C only. Either party may terminate with 30 days’ written notice. Engagement fee billed and paid to date of notice is non-refundable. Tail of 12 months applies.
Termination for cause: All options. Either party may terminate immediately upon material breach by the other party (including misrepresentation, failure to pay fees when due, or breach of exclusivity), subject to 10 days’ written cure notice.
Tail: 12 months on any target introduced or substantively engaged during the term. Success fee is owed on any close within the tail period regardless of which party terminated.
Expenses: All travel expenses require advance written approval. Direct out of pocket expenses (postage, third party data feeds) billed at cost.
Exclusivity: Next Chapter is the sole buy side advisor for the four target program inside the listed geographies and target profile. Capstone may pursue opportunities outside that scope independently.
Confidentiality: mutual, full term plus 24 months. NDA executed in parallel.
Conflicts: Next Chapter will disclose any commercial relationship with a target before contact. Walk away rights on either side if a conflict cannot be cured.
Governing law: state of Capstone’s headquarters, exclusive venue.

Selection

Circle the option you want and initial. We will counter sign and start the target list Monday.

▢ Option A, Performance Only
▢ Option B, Balanced (recommended)
▢ Option C, Committed

Initials: Ches Booker ____________ Ewing Gillaspy ____________ Mark DeChant ____________