This call is a discovery session to discuss a business unit that was acquired as part of a February 2024 acquisition of four entities. The main business of interest was a TPA (third-party administrator), but this life care planning and forensic vocational business came as a side acquisition. The business has 22 people total (8 in forensic voc, 13 in life care planning, including 7-8 contractors on 1099 status, plus one salesperson). The business operates on a T&M (time and materials) structure with billable rates plus margin.
The company has struggled with direction since acquisition. They initially pursued a permanent disability placement service line that proved non-viable (affecting only 1 in 1,000 cases), which Larry eventually shut down last summer. There's high customer concentration and unclear go-to-market strategy. The business uses Clio for time tracking (upgraded from PC Law). The primary objective of this call is to understand what deliverable the clients need, establish parameters for documentation, and understand the compilation process to ensure accuracy.
Speaker A (James) is trying to gather information about how the business came into their possession, current operations, and what the ideal deliverable looks like. Speaker C (Brent) and Speaker B (Matt) are providing background on the acquisition and current challenges, while acknowledging they don't fully understand the two main service lines (life care plans and forensic voc work).
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Brent, Shaka, bro. Is that our Friday? Is that our Friday salutation around the new office? Like, you're just walking around like it's Friday.
Not new anymore, it's been 14 months.
Oh yeah, right?
Yeah.
Um, okay, cool. Well, thanks for jumping on. Um, I think as a way of background, Brent brought up this kind of appendix to a business that you guys purchased a ways back. So I think maybe— I think our objective is really to just ask a bunch of questions to you guys and answer any questions you have with really trying to bring some parameters and specificity to what is the— what is the deliverable? What's your dream deliverable look like here, I guess? And what are the outcomes you're trying to kind of drive from said deliverable?
Yeah, and I'm curious, James, on— or maybe it's JD, because I think you're going to actually maybe do the work— is the process of how you compile this stuff. What are you going to actually do to try to sort of like kind.
Of a sources and means of how the document comes together?
Correct. Right.
To make sure it's not one giant hallucination.
Right. I could do— I could make that up too. Right. Oh, all right.
So maybe to start, if you could just set the table with the how this business unit came into y'all's possession once again and just kind of like the story so far, if you will.
Yeah. So it was part of the acquisition of February 2024. We purchased 4 entities. The entity, it was part of an entity that was a TPA. We were interested in the TPA. It was just a side business.
TPA, third-party administrator.
There's a workers' comp, which we do, right? It was a side business. There wasn't great financials of what it was. Is it making money? Is it losing money? What is this thing? And I think they the seller, um, kind of just acquired it through some acquisitions of their own. It wasn't the pursuit by any means, it just kind of got lumped in and it is what it is. Um, the guy that was running point on the seller side kept telling Larry, he's like, no, no, this makes a lot of money. It is a T&M structure, um, so the people that are doing these report-outs are kind of 1099 employees and they have a non-billable rate but a billable rate, but then we put margin on that when we deliver the engagement. So there is some follow-through there. I think they're a little bit heavy on the operational side of things. We did invest in a tool called Clio. They were using something called PC Law, so it kind of sits in that attorney legal space so they can track their time and engagements and all that sort of thing, right? But yeah, I mean, we closed on it and then I don't think Larry had a clear plan what to do. He assigned it to, you know, one of kind of our high-performing operators just to kind of see what she could do with it. But, you know, what we've found, I think I shared with you guys, is high customer concentration. We've hired a salesperson, but, you know, maybe more recently there's a little bit of a plan, but last year that didn't really seem to be much of a plan as far as who they're going to go after. She came from the insurance space and was pushing hard— what was it called, Matt, that they were going after hard last year?
Um, like these— like, if a person gets hurt at a job and becomes permanently disabled, replacement. Yeah, yeah, like never goes back to work ever, placing them somewhere where they could have a career, um, and continue to get these payments. Um, so it was a very narrow— like, the problem was we have another business that will take an injured worker and put them on a part-time light duty type thing, like the modified duty.
While they're out, so they're not just getting something for nothing.
We have a business that'll do that, and then we find out that like 1 out of 1,000 people will be we'll go on to the next step to be permanently this thing. So we're— it took, it took Larry a little bit of time to get to talk to the woman out of it. She's like, we're not— finally he was just like, we're not doing this. I don't understand what you don't understand. There's no— there's not really a market here, right? So that was probably sometime last summer or beginning of last year, Brent. Yeah, that would have been sometime last summer.
Yeah, because they had, they had 2 people that were kind of doing the work and then they shut that down. So there's really only two lines of business that I can't— honestly, I don't know if I could really do a good job explaining what they are. James, there's life care plans and then there's this forensic folk. And I think it's the same personnel to a degree that kind of go back and forth of what they're doing.
So let me— go ahead. Forgive the interruption there, but there's some clarifying questions I want to ask. When you say there's two people doing the work, Well, and then you're trying to kind of put it in like there's 2 maybe chief activities they engage in. Number 1 is kind of this life care planning piece, and the other one is kind of like this expert witness kind of, I don't know, basically service. Is that a service?
Yeah, the 2 people I was referring to were this permanent placement that is no longer there. The total entity has 22 bodies in it.
Full-time or contractor?
Because I think there's 7 or 8, the 1099 people, and then the rest are like admin operational people. So.
Is there an org chart that exists for that group?
Yeah, I can find it.
And so when we think about those 22 people, those are all people that are assigned to this life care planning business unit or are part of kind of this larger group of, like, packet of companies you bought?
Yeah, I can get you more specificity. So there's 8 in forensic voc and 13 in life care planning.
And these are what we would call back office or sales ops types, type functions, all operations.
These are the ones that are delivering the reports, right, that we're invoicing for. So the 1099 people are included in this number.
Okay.
And we have one salesperson.
So 8 in kind of that forensic, 13 in this kind of life care planning.
That's right.
And then one salesperson.
Right.
And that salesperson came from an insurance side and was really pushing for this kind of permanent modified duty type as an opportunity or as an area of focus. And I want to make sure I'm hearing this right.