Over the past 35 years, TPA Network has facilitated dozens of TPA mergers and acquisitions, representing both buyers and sellers. As former TPA owners, we understand and appreciate the magnitude and significance of selling a business that you have spent a career building, especially if you still enjoy running it.
It is probably not surprising to learn that there is generally a reluctance on the part of TPA owners with regard to discussing a retirement or exit strategy. Indeed, our experience has been that sellers often regret not planning ahead when the options available to them diminish or when they realize that some foresight or planning could have made for a significantly higher valuation of their business. The reality is that making preparations to sell your business is much like creating a will or getting an annual physical - not entirely pleasant to contemplate, but necessary and beneficial. For this reason we encourage you to take a few moments to consider various retirement and exit strategy options and the steps that you can take now to optimize the payoff for the many years of hard work that you have devoted to building your business.
The Value of Planning
Many TPA owners find themselves wanting or needing to sell their business only to find that they are either unprepared to do so or that they could have gotten materially more money or better terms if they had prepared properly and in advance of the transaction. We say "need" because as much as we would like to think that we are immortal, often times an illness or family matter necessitates making such a move. Indeed, many of the TPA sales with which we have been involved have been the result of situations that were neither foreseen nor controllable by the TPA principal. Clearly, if you are anticipating retirement any time soon, now is the time to get prepared and to begin the process. Most TPA purchasers want a management team that is capable of operating the company and willing to remain in place for at least a year or two after the transaction. We advise our TPA clients to begin cultivating senior management early, to identify possible purchasers, and to enter into a transaction while they still have an interest in remaining on board for a while. Also, it is noteworthy to mention that TPA owners who carefully plan for the eventual sale of their company by taking advantage of early tax planning opportunities are often able to keep much more of the sale proceeds.
Many TPA owners, even those in their mid to late 60's, are not ready to leave the industry or retire. While they know that they eventually need to plan their exit strategy, they still enjoy operating their businesses and have a desire to stay in the game for a few more years, albeit at a slower pace. At the same time, many know that they could benefit greatly from an infusion of capital for technology improvement, territorial expansion or to add new lines of services. Understanding this, many astute TPA consolidators and private equity investors have positioned themselves to make investments in TPAs as a part of a multi-phase acquisition strategy. TPA Network is able to structure such arrangements on terms that enable a TPA owner to remain actively engaged in the business without having to entirely bear the risk and financial burden required to remain competitive in today's dynamic marketplace.
Market for TPA Acquisitions and Mergers
Where there is a willing buyer and a willing seller there is always a market for a well-run TPA. This is especially the case now that the ACA will be repealed and/or replaced and insurance carriers gear-up for the development of new health insurance products for the post-ACA era.
TPA Network has been on both sides of the acquisition-merger table and, as such, we fully understand the challenges and dynamics of preparing for and effecting these types of transactions. We have been successful in matching acquirers and sellers once we identify the key ingredients desired by both and we are experienced at facilitating the completion of these transactions through the ups and downs of the process. In all instances we are proponents of a fair deal for all parties and we only affiliate ourselves with organizations that share this vision: we do not represent bottom-feeders, tire-kickers, or entities that try to buy companies with their own cash flow.
Business Valuation Services
There are a variety of reasons to have a valuation done of your business including divorces, estate planning, and for positioning the company for sale or merger. TPA Network is uniquely qualified to perform valuations of TPAs for several important reasons. First, we know and understand the industry better than anyone. Second, we have data and information on past transactions that is not commonly available in the market. Third, we have credibility with accountants, lawyers and others who might have to approve of the business appraiser. And lastly, we are competent and employ the most widely accepted valuation methods for privately-held companies. All of these are critically important factors when selecting a valuation firm.