Most title agency owners price the exit on peak-year numbers their books will not survive.

That is the gap Adam Coffey put on the Title Agents Podcast. Coffey is a private equity operator who has bought and sold platforms. The episode is M&A Tactics to Turn Your Title Company into a Lucrative Asset, August 6, 2024. The useful part is not a sales pitch. It is how an independent title agency owner prepares earnings that a buyer will still believe after quality of earnings.

Buyers pay for the multiple on clean earnings

Coffey’s first point is the arbitrage that makes PE interested in platforms. On tape he walks a last platform that bought about 23 companies at roughly five times EBITDA and sold the combined business at about fourteen times. His framing: nine dollars of profit for every dollar bought and paid five for. The lesson for an independent owner is not “get fourteen.” It is that buyers pay for earnings that survive diligence, not for the best year you remember.

If your story is revenue vanity, the multiple never arrives. If your story is adjusted EBITDA a sell-side review will stand behind, you are in the conversation. Peak-year nostalgia is not a number a QoE will protect.

The first sale is a rest stop, not the finish line

Coffey’s second claim is the rollover math. He walks a sale around sixteen point four million: about twelve million cash and four point four million rolled. The rollover became about seventeen point six million in twenty-seven months. Total roughly twenty-nine point six million. Roughly seventy-thirty cash to roll. His line on tape: the first sale is a rest stop on the wealth creation highway.

For a title agency owner that means you do not have to cash out of everything to win. A partial rollover keeps you in the next multiple if the platform grows. It also means you need a business a buyer will still want after you take chips off the table — not a practice that dies when you leave.

The QoE trap

Coffey’s third claim is the one that kills deals. Books showed about two point five million in earnings. Buy-side quality of earnings cut that to about five hundred thousand because of errors. Get a sell-side QoE or a serious CPA review before you market the agency. Do not discover the hole on the buyer’s clock.

Owner-dependency sits next to that trap. On tape he notes that roughly eighty percent of owners who want to sell cannot find a buyer, and he walks a thirty-day absence test: if the agency cannot run without you for thirty days, you do not have a sale. You have a job with a price tag. Buyers do not pay for your calendar. They pay for a system that keeps working when you are offline.

What to do tomorrow

Pull twelve months of P&Ls and three years of history. List lifestyle add-backs honestly. Book a CPA, bookkeeper, or sell-side quality of earnings review aimed at adjusted EBITDA. Optional: run Coffey’s Rule of 130 on the numbers, and take the thirty-day absence test before you talk to a buyer. Put the adjusted EBITDA next to the peak-year number you have been quoting yourself. That gap is the work list for this quarter, not a surprise in diligence.

Selling is not the finish line. It is the first rest stop. Clean books, a title agency that runs without you, and a partial rollover is how owners turn one payday into two.

Episode: M&A Tactics to Turn Your Title Company into a Lucrative Asset with Adam Coffey, August 6, 2024.

https://www.youtube.com/watch?v=d5qL9LfHCUQ

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