Retired, but still reading

When you retire, you want to be retired! 1. We provided buyer with a USB hard drive that had all files & workpapers - everything - for the life of our firm (35+ years). Whether there's an IRS audit an attorney dealing with an estate trying to determine if someone still has money in a plan, it's all there for the buyer to deal with. 2. At the advice of both ERISA counsel and our regular attorney we "invested" in a 6 year E&O tail, that also covered first-dollar defense costs. As I recall the annual tail premium was about half of our normal annual premium.

Hi - Thought that I'd share some opportunities to rack up some free CE hours online: 1. CPA Academy - lots of free courses, as well as some that you can pay for. In addition to some retirement plan topics, ethics, and retirement planning there are a lot of other interesting presentations - https://education.cpaacademy.org/. 2. IRS webcasts - there are general IRS topics as well as retirement plan topics and ethics. I realize that this late notice, but tomorrow (6/4), there's a free 2 hour ethics webcast on Circ. 230 - perfect for ERPA's and Enrolled Agents - see https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners

Hi -here's a long answer We sold our firm (sale closed early 2017). I'll preface my comments with a few caveats: 1. We did our deal in a good market (for sellers) 2. With coronavirus, we're living in a totally new world order. I wonder how our former clients (mostly small and medium sized businesses) are coping/surviving and how they're paying TPA fees. I have no idea how this has affected the mindset of potential buyers ... My wife (also my business partner) and I were ready to retire and since our staff wasn't in a position to take over the business, a sale was necessary. We were comfortable handling the sale and negotiations ourselves - although we did have both our regular general business attorney and our high-fee ERISA attorney assist with the paperwork as needed. We also leaned on our CPA for help on the tax ramifications. We started by deciding what was acceptable to us - in terms of retention of staff, price and payment terms. Then we started the process by reaching out to potential buyers - some were friends who owned TPA shops and some were competitors who had (at some time) expressed an interest in acquiring us. We set up face-to-face lunch meetings with each to start a discussion. The initial meetings were informal and we didn't bother with a non-disclosure agreement for the preliminaries. We also were approached by a TPA business broker who introduced us to a potential buyer who we met with (but didn't sell to). For the meetings, we put together a 2-sided sheet - on one side was some info about our firm: brief history, client geographical demographics, description of billing practices, overview of software/IT, mention of E&O coverage, my willingness to work for a year after closing, gross income for past 2 years, listing of staff (not by name) with brief job description and salary, our selling price and the reason that we were selling. On the other side of the sheet were the questions we had for the potential buyer: 1. Purchase transaction A. Price B. Timing of payment(s) C. Contingencies (including death/disability of working seller) D. Effect of rebranding on price/contingencies 2. Role of seller A. Duties - during and after transition 1. Transition of client relationships 2. Transition of professional/referral relationships 3. Software conversion - CRM, admin, docs 4. What can I add to acquiring firm? B. Expected hours/week & schedule & duration of employment w/buyer C. Time tracking? D. Pay E. Time Off F. Continuing Education G. Dress 3. What can I do afterwards and not compete? A. Work for software vendor/investment platform B. Write/teach C. Contract work With the answers to our questions from each prospective buyer, my wife and I selected the buyer who was the best fit for us and then we proceeded to work out the details with the buyer. We began with mutual non-disclosure agreements. Then there were a lot of meetings, emails and disclosures. From there we started working on the purchase agreement and related documents. The buyer provided the first draft and there were a LOT of revisions - most of them ours, but then we had to run them through our attorney and then the buyer had to have them reviewed - then more negotiations on terms in the agreement and finally we all signed it! In working out the details, we focused on keeping it simple - especially on cutoff date for fees/collections. We insisted that there would be no buyer meetings with staff until we (buyer and seller) had put together a fully detailed and orchestrated transition plan. As part of that plan, we insisted that we wanted to announce the sale to our team without the buyer's team present. That was important for our culture and so that our team could have a full and frank discussion about it. We flew in our remote employees (at our expense) and met in the afternoon. The next day, the buyer's team started first thing in the morning - covering their firm, HR, benefits, etc. I worked for a year and then retired. I don't know how we could have done such a smooth transition without me hanging in for that year - I worked my butt off that year. It's been over 2 years since I retired and our team members are still employed by the buyer. I run into clients when I'm bopping around town and they all seem to be pretty happy (if they weren't happy, they'd let me know). The buyer's checks didn't bounce, so I'd have to say that everybody's happy. If you've got some specific questions, let's take this off-line and I'll try to answer them. Cheers!

Hi TPApril - Am not sure what concerns you had regarding business continuity - there's a whole spectrum - from office burns down (disaster recovery) to owner/practice leader dies/becomes disabled (succession - hopefully with less drama than the HBO series). As a business owner, this is something is part of your SWOT (strengths, weaknesses, opportunities and threats) analysis - a fundamental element of business planning. Prior to selling our TPA shop and retiring, we were in pretty good shape for disaster recovery, but succession was a big concern for my wife (also my partner in the business) and I - especially the event of my death or disability, since I was the face/front-person and practice leader. Fortunately, over the years I developed friendships with a number of other TPA firm owners and prior to our sale, we had conversations with them about helping out in the event of my death/disability. Not really a buy/sell, but more of a bridging assist until the business got sold or liquidated. Fortunately, we never had to call on our friends, but we laid the groundwork and also provided our attorney with detailed information about our operation and how to wind it down/sell it. That way the attorney & our CPA could oversee things and would be aware of the friends who'd agreed to help out. I'd be willing to share the information layout with you - just provide me with your email address. If your concern is more along the lines of disaster recovery, you might want to talk with some of the TPA's from New Orleans who survived the disruption of Hurricane Katrina. As for the coronavirus mess we're in now - this is totally new ground for everybody and you'll be coping and innovating as you go - on both the operational and financial fronts. As an owner, business continuity (any flavor) is one of those things that should keep you up at night - always best to have a plan in place! Good luck! Peter

OK - as the handle says, I'm retired, but still reading/interested ... so am a little late in adding my 2 cents, since the weather was nice and the tractor beckoned. As a TPA firm owner, our policy was that when someone wanted to move to a new provider, we held the door open for them and provided them with whatever documents they needed at no charge. We were able to do this because all of our files (40+ years) were digitized as pdf's, organized and easy to access. We undertook the digitization project for disaster recovery purposes - digital storage is dirt-cheap - but the digitization was quite an undertaking. Fortunately, our interns did a great job of scanning (and checking every scan) and they were well-paid for it. Even when we were paper-based, we were the repository of last resort for plan information, whether it's compensation history, confirmation of an old distribution for an attorney handling a participant's estate or that signed amendment required as a condition for a favorable Letter of Determination for an IRS audit ... we felt a responsibility to keep the info and folks that needed the info were extremely grateful that we had it. It wasn't clear whether pensionmaven's new client owed the prior TPA for services - if we had a non-paying client, we'd still furnish plan records for work that was completed/paid - at no charge. On takeover cases, our general rule was to call the prior TPA (not email, not fax - a phone call) - often a phone call helps you to better understand what you're getting into with the new client - and by making it personal, the former TPA may relent on the copying charges. I don't know about your market, but in our market, most of us were cordial, friends and willing to help each other. FWIW Peter