John Mason Smith created Astra Acquisitions to help small payroll businesses sell together. Individual firms with $500k in revenue struggle to get a 3x valuation, but he believed aggregating several into a $5 million portfolio could attract that multiple from buyers like ADP or Paychex. He validated the idea by asking acquisition firms directly if they'd buy a grouped deal.
Everyone always says 3x, but no one's really giving a $500,000 book of business at a 3x valuation. And, you know, I said, well, what if we just took a bunch of you guys and combined you together until you were like, you know, $5 million and then maybe someone would give you 3x. And he said, that's great. If you do that, you know, put me on the list. And so I started talking to my attorney and I ended up spinning up a little side business just as a side project called Astra Acquisitions because Astra Payroll, right? And the idea was, I didn't want to be a broker, but I wanted to find people that were thinking about exiting if they could get some magic number, and then we would just group exit at the same time. We would go to like ADP or Paychex or someone and say, "Look, we're all going to sell or none of us are going to sell if you give us this." So I took that idea and the first thing I did was I called all the people buying payroll companies that I could think of or get introduced to, and I asked, "Would you be into this idea?" And I learned a lot about how every one of these acquisition companies buy payroll companies based on their response to that.
