Hi all - Kicking off a new RTC Live Deals series — showcasing real deals you can actually acquire–starting with a highly profitable third-party administrator ("TPA") business.
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📝 Deal Overview: Third-Party Health Benefits Administrator
Why this deal: ~50% EBITDA margins, recurring revenue model, and fragmented roll-up opportunity in compliance-driven niche serving hourly workforce segment.
2025E Revenue: $10,000,000
2025E EBITDA: $5,000,000
Deal Type: Founder-owned; majority recap or full exit; no minority investments
Headquarters: United States (with operations in South America)
Founded: 2012
🔎 What They Do
This national third-party administrator (TPA) specializes in cost-effective employer health coverage alternatives for high-turnover, hourly, and low-wage workforces requiring Affordable Care Act (ACA) compliance.
Company provides:
Minimum Essential Coverage (MEC) and Minimum Value Plans (MVP) as core offerings
ICHRA, hospital indemnity, dental & vision, and upgraded pharmacy programs
Other services include: in-house claims administration, proprietary claims software, IRS compliance filings, and payroll-linked weekly coverage cycles
Key Verticals: Fast food franchises, staffing companies, healthcare, light industrial, and other blue-collar industries
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💡 RTC Perspective: Investment Highlights & Risks
RTC Take:
This is a classic founder-to-institutional transition opportunity. The 50% EBITDA margins and recurring revenue model provide exceptional cash generation, while the fragmented TPA market creates a clear roll-up thesis. However, the business sits at an inflection point: the founder has built a profitable operation through offshore leverage and lean operations, but scaling to $50M+ revenue will require meaningful investments in technology infrastructure, go-to-market capabilities, and executive bench strength.
Why It’s Attractive:
Sticky Revenue Model: Nearly all revenue comes from recurring administrative fees, offering predictable, cash-flow-heavy economics.
Lean Operations: ~50% EBITDA margins significantly exceeds typical TPAs, driven by tech leverage and offshore operations model (however, with investments to be made).
Fragmented Market: Hundreds of small TPAs operate regionally. This platform provides the infrastructure to consolidate and professionalize smaller operators.
Key Risks:
Regulatory Dependency: Any change to ACA mandates or employer coverage requirements could impact core demand.
Incremental Investments: The current financial profile likely signals additional investments are required to transition the business from a founder-owned to an institutionalized business
Founder Dependency: Need to diligence reliance on the founder for key client relationships and vendor negotiations. Transition plan and knowledge transfer will be critical to de-risk the business in the first 12 months post-acquisition.
💼 Recent Private Equity Deal Comps
Acquirer | Target | Date | Notes |
|---|---|---|---|
Shore Capital Partners | Point C | Nov 2024 | TPA for self-funded employers focused on medical benefits and cost containment |
Rainier Partners | Welfare & Pension Administration Service | Dec 2024 | TPA specializing in multi-employer benefit (union) plan administration |
Harbour Benefit Holdings (BPOC backed) | A.W. Rehn & Associates | Apr 2025 | TPA for Taft-Hartley trust funds (unions) |
Aquiline Capital Partners | Avondale Risk | May 2025 | Roll-up vehicle with recent acquisitions in Intercare, InterMed, and George Hills |
🔗 Access Deal Materials
Interested in learning more? Contact Tomos at [email protected] at SourceCo to receive the full deal details.
Have a deal to share with RTC readers? Email me at [email protected]
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Disclaimer: Information herein is sourced from publicly available marketing materials. Shared for educational and informational purposes only. Road To Carry is not affiliated with the seller, broker, or any party to this transaction.
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