TPA owners
Selling your TPA business
PE-backed platforms and strategic administrators buy TPAs with durable fee revenue and clients who renew.
By Axia Growth
What is my third-party administrator worth?
If you own a third-party administrator with under $2M of earnings, buyers price it on SDE (seller's discretionary earnings: profit plus the owner's pay and perks). In Axia Growth's analysis of closed small-business sales, Financial Services businesses with under $500K of SDE sold for a median 3.7x SDE (middle half 2.8x to 8.5x, 70 sales). Third-party administrators are grouped in the Financial Services sector of that data; there is no figure for third-party administrators alone.
| Earnings size | Median | Middle half | Sales |
|---|---|---|---|
| Under $500K SDE | 3.7x SDE | 2.8x to 8.5x | 70 |
| $500K-$1M SDE | 6.0x SDE | 4.0x to 19.1x | 27 |
| $1M-$2M SDE | 9.4x SDE | 5.1x to 16.0x | 46 |
| $2M-$3M EBITDA | 11.0x EBITDA | 8.3x to 13.5x | 29 |
| $3M-$5M EBITDA | 9.1x EBITDA | 5.6x to 12.7x | 33 |
| $5M-$10M EBITDA | 9.8x EBITDA | 6.1x to 13.6x | 51 |
| $10M+ EBITDA | 9.0x EBITDA | 5.7x to 14.4x | 96 |
Larger businesses, with $2M or more of EBITDA, are usually priced on an EBITDA multiple instead. For the Financial Services sector the median was 11.0x at $2M to $3M of EBITDA (29 sales), 9.1x at $3M to $5M of EBITDA (33 sales), 9.8x at $5M to $10M of EBITDA (51 sales) and 9.0x at $10M+ of EBITDA (96 sales).
Example
Take a third-party administrator with $400,000 of SDE. $400,000 x 3.7x (the median for under $500K of SDE) = about $1,480,000. At the middle half of sales (2.8x to 8.5x), the same business lands between about $1,120,000 and $3,400,000. This is arithmetic on a published median, not a valuation of your business.
What moves the price of a third-party administrator:
- A diversified client book, with no single carrier, MGA, employer group or plan sponsor carrying an outsized share of fees.
- Client retention documented by cohort across several renewal cycles, with a reason for every lost account.
- A full service menu and a technology platform that already delivers digital access and real-time reporting.
- Management depth beyond the founder, plus clean state licensing and bonding wherever the firm touches plan funds.
Source: Axia Growth analysis of 4,554 closed small-business sales over $500K, aggregated and de-identified. Sector-level medians; a size band is published only when it has at least 10 sales. Data as of October 28, 2026. How the data is built.
Get an instant range with the business value calculator · Read the Third-Party Administrators (TPAs) industry guide
Not an auction.
One acquirer, one direct conversation. Our buyers typically keep the team and have the capital to close.
How long it takes to sell a third-party administrator
Axia Growth does not publish an average time to sell, because the honest answer depends on you more than on the market: a sale moves as fast as you can answer a buyer's questions. Every sale goes through the same five stages.
- Prepare. Separate personal and business expenses, pull two to three years of financials, and list what transfers with the business. The cleaner this is, the faster everything after it goes.
- First conversations. A buyer learns the business and your goals, and you learn what they plan to do with the third-party administrator and your team.
- Letter of intent. The buyer puts price, structure (cash at close, seller note, earnout) and your role after the sale in writing. It is usually non-binding, with a period of exclusivity.
- Diligence. The buyer checks financials, customers, staff and contracts, and will review client retention across renewals and how much revenue depends on outcome targets, check where you are licensed or registered and what each state requires on a change of ownership, and test where your work crosses into fiduciary territory. Most delays happen here, and most trace back to missing records.
- Close and transition. Final agreements are signed, money moves, and you help hand over customers and staff for an agreed period.
Who buys third-party administrators
- PE-backed claims and workers' comp platforms. They want specialist TPAs with complex-claim expertise and adjacent services, often with leadership staying in place.
- Large strategic claims administrators. They want claims capability and client books that add to their existing operations.
- Large private equity sponsors in health benefits. They want administrators that run group health benefits for self-funded employers.
- Retirement-plan consolidators. They want smaller pension administrators and the plans they service, to grow their TPA and recordkeeping work.
What buyers pay for
- A diversified client book with no outsized relationship.
- Client retention documented across renewal cycles.
- A full service menu on a current technology platform.
- Clean state licensing and a clear fiduciary line.
What hurts value
- One carrier, MGA, employer group or plan sponsor carrying an outsized share of fees.
- Revenue tied to flat-fee or outcome-based arrangements, with no clear record against the targets.
- A founder-led business with no management depth or succession plan.
- Technology that needs a rebuild to deliver digital access and real-time reporting.
- Gaps in state licensing, undocumented discretionary authority over claims or plan assets, or missing bonding where the firm touches plan funds.
How to prepare
- Get 2 to 3 years of books clean and separate.
- Document client retention by cohort, with reasons for lost accounts.
- List where you are licensed or registered, state by state.
For deal activity, buyer types and every published size band, see TPA valuation multiples→ Or see every Financial Servicesguide →
Common questions
What is my third-party administrator worth?
If you own a third-party administrator with under $2M of earnings, buyers price it on SDE (seller's discretionary earnings: profit plus the owner's pay and perks). In Axia Growth's analysis of closed small-business sales, Financial Services businesses with under $500K of SDE sold for a median 3.7x SDE (middle half 2.8x to 8.5x, 70 sales). Third-party administrators are grouped in the Financial Services sector of that data; there is no figure for third-party administrators alone. Larger businesses, with $2M or more of EBITDA, are usually priced on an EBITDA multiple instead. For the Financial Services sector the median was 11.0x at $2M to $3M of EBITDA (29 sales), 9.1x at $3M to $5M of EBITDA (33 sales), 9.8x at $5M to $10M of EBITDA (51 sales) and 9.0x at $10M+ of EBITDA (96 sales). Example: Take a third-party administrator with $400,000 of SDE. $400,000 x 3.7x (the median for under $500K of SDE) = about $1,480,000. At the middle half of sales (2.8x to 8.5x), the same business lands between about $1,120,000 and $3,400,000. This is arithmetic on a published median, not a valuation of your business. Source: Axia Growth analysis of 4,554 closed small-business sales over $500K, aggregated and de-identified. Sector-level medians; a size band is published only when it has at least 10 sales. Data as of October 28, 2026.
How long does it take to sell a third-party administrator?
Axia Growth does not publish an average time to sell, because the honest answer depends on you more than on the market: a sale moves as fast as you can answer a buyer's questions. Every sale goes through the same five stages. Prepare, first conversations, letter of intent, diligence, then close and transition. For third-party administrators, the longest stage is usually diligence, where buyers review client retention across renewals and how much revenue depends on outcome targets, check where you are licensed or registered and what each state requires on a change of ownership, and test where your work crosses into fiduciary territory.
What happens to my state registrations when I sell?
State TPA rules vary. Buyers ask where you are licensed or registered and what each state requires on a change of ownership. Pull that list together early so it does not slow down diligence.
Does it matter whether we handle plan funds?
For benefit-plan TPAs, yes. Buyers look at whether your work is purely administrative or includes discretionary authority over claims or plan assets, since the second raises the risk they have to price. They also check that bonding is in place wherever you touch plan funds.
Can I keep a stake and stay in my role?
Often, yes. Deals in this space commonly use a majority recapitalization where management keeps a meaningful stake. Some platforms pitch founders on deals where leadership stays in place, backed by shared infrastructure and capital.
How do I get a number for my own business?
Enter your industry and annual earnings (SDE or EBITDA) in Axia Growth's free business value calculator for an instant range from the same closed-sales data. For a detailed valuation, continue from the calculator; it is free and confidential. The Third-Party Administrators (TPAs) industry guide shows every published size band for the sector.
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