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Guest Kevin1

Selling My Firm

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Guest Kevin1

I am contemplating retirement and the sale of my TPA practice.

How is this type of business valued? I realize there are many variable including transition issues, down payment, equipment included, etc. There are firms that value CPA firms which are similar, however different. Are there a firms that are more familiar with TPA firms?

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Our firms are a niche business and we all do business differently, so there really is no single rule of thumb. I know people who have sold at a multiple of revenue, generally no more than 1x revenue. Also firms have been sold for a multiple of adjusted EBITDA, anywhere from 3x to 5x EBITDA - "adjusted" meaning adding back certain owner perks that the firm is paying for. Depending on the buyer, a "producing" TPA firm can sometimes command a higher price than a non-producing TPA firm because they control more of the client relationship.

A financial buyer will be looking at your numbers and their potential return on investment. Other factors include the mix of plans, concentration of revenue and terms of the deal (stock or asset sale, cash up front, notes, stock swap, earnout period, your transition and non-compete, etc.) First order of business would be to work with your CPA to create GAAP financial statements. There are also some CPAs and other consultants who help business owners groom their companies for eventual sale, cleaning up financials, etc. Can be a 2-3 year process.

At the end of the day, however, they are worth no more than what a willing buyer will pay. Good luck.

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Guest Kevin1

Thanks, shERPA. I appreciate your comments.

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Guest TPA Buyer

Kevin1,

Please contact me. I'm very interested in buying your firm.

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Guest RBJAKE

Kevin1,

We would be interested in purchasing your TPA firm if you are still in the market. Have made several aquisitions over the past 4 years. Please contact me.

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Guest happel

Kevin1,

Did you sell your firm, if not please contact me. I'm very interested in buying your firm.

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Guest herbieglass

Kevin1,

Please contact me. I'm very interested in buying your firm.

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Hi Kevin,

Are you still contemplating retirement or looking for an exit strategy at some point? I think that if you are still in the market or considering, maybe we can establish a dialogue to first determine if we are a good fit for each other.

Having a phone conversation to establish goals and objects would be helpful for both parties. Maybe we can have a joint venture of some kind until you are looking to sell your firm.

Please let me know how to get in touch with you or you can reply back to me if you are or you are not still contemplating retirement and selling your TPA firm.

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