ASK THE EXPERTS – Acquisitions Fuel TRA’s Nationwide Growth

TRA Newsletters
President/Owner – Matt Schoneman

As a third-party administrator (TPA), The Retirement Advantage, Inc. (TRA) continues its growth trajectory throughout the United States, in large part because of successful acquisitions. In an exclusive interview, TRA President and Owner Matt Schoneman shares the firm’s acquisition strategy and how firms interested in being acquired can reach out to TRA.

How many acquisitions has TRA completed historically — and thus far in 2021?

We’ve completed 32 acquisitions since 2001. And this year, through mid-August, we’ve completed four so far. By August month-end, we should close on #5, with a handful of others in the pipeline.

Do you see TRA continuing to acquire TPAs at this rate?

Yes. The TPA business, like the entire retirement industry, is in a long-term consolidation trend. A lot of owners started their TPAs in 1970s and1980s. Now they’re looking at succession planning, especially when family members aren’t going to take over the business. When TPA owners are motivated to sell, we try to offer them different and flexible solutions that will make it easy for them to implement a succession plan that works for them, their employees, and their clients.

Do you identify most acquisition candidates? Or do TPAs themselves (or their investment bankers) identify them?

We identify most of them. As I’ve said, many TPA owners contact us. We identify some acquisition candidates ourselves, especially through one-on-one networking or LinkedIn. We also have relationships with some well-connected industry consultants who call us with possibilities.

Although each acquisition is unique, are there any “hallmarks” that lead you to target potential acquisitions (e.g., size, geographic location)?

We’re open to acquiring any and all TPAs. But generally, what we’re looking for in an acquisition candidate is a good “cultural fit” with TRA.

There are several criteria we look at. For example, what’s the TPA’s service and business model? As TPAs, we may do the same things, but we can have very different ways of accomplishing our mission. What are the TPA’s core competencies — and do they enhance or expand our own? It’s a great bonus when an acquisition enables us to grow our current service offerings or offer new services. The same thinking applies on the distribution side: Will the acquisition deepen our presence in one of our current markets or take us into new ones?

We also want to be assured that a TPA we acquire is generating quality revenues and has an established client base.

Diving deeper, it’s also important that our software systems align with those of a TPA we’re acquiring so that we can ensure a smooth integration of our operations.

Do you have a designated team assigned to acquisitions? If so, how do they work?

Yes, we do have a dedicated team, headed by Integration and Organization Development Manager, Chris Bedinelli. Chris is responsible for each acquisition from initial conversation to closing. He also spearheads preliminary due diligence. Chris works hand-in-hand with me to develop all aspects of an acquisition, such as the letter of intent, purchase agreement, disclosure, and communications strategy.

Once we have a signed letter of intent in place, each of our department heads start having conversations with their counterparts at the company we’re acquiring so that we have a good understanding of how they are working. This is also a helpful best-practices exercise.

Depending upon their preference, the majority of TPA owners stay on for some time after an acquisition closes, typically from one to three years. A few decide to continue with TRA, but most leave the company, since they’ve successfully completed their succession plans.

Typically, how long does it take to complete an integration?

Smaller ones usually take three to six months. Larger ones take 12 to 18 months

If a TPA is interested in being acquired by TRA, what should they do?

The whole process starts with a conversation. If you would like to talk to us about an acquisition, I’m available at 920.831.3263. After we talk, we’ll send you a comprehensive profile that will help us both decide how best to move forward.

Or if you’re working with a consultant, ask them to contact us on your behalf or visit our Acquirer Profile page.

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