Michael P. Kahn & Associates, LLC.

• I want to sell a percentage of my company
• I would like to buy a percentage of a company

I want to sell a percentage of my company

How is my company valued? How are my assets valued?
Our highly successful process starts with a visit by a member of our team for the purpose of valuing your company. We want to be sure that we can meet our clients’ expectations before we take an assignment. Our written valuation reports explain how we apply three or four approaches—those used by buyers and investors—to your financial information to arrive at a range of values for your company. We also discuss the subjective factors, such as market share, strength of management team, etc., and their impact on your company’s value. The report will typically address structures we believe will help you receive the highest value for your company. We charge a fee for this service, and there is no commitment to engage Michael P. Kahn & Associates.

Since we close the largest number of transactions of any consultants in the homebuilding industry, we get regular feedback on the accuracy of our initial valuations. Michael P. Kahn & Associates continuously meets, and frequently exceeds, our clients’ expectations.

I’m not ready to share my intentions with my staff, how can this be kept confidential?
Most of our clients are concerned about confidentiality, and we employ several techniques to keep information closely guarded. We restrict our phone calls and emails to accounts you specify as private; some of our clients set up email accounts outside their company’s email system. We hold meetings with potential buyers and investors off-site, and can even arrange for due diligence review to be performed off-site.

How can I protect myself from misuse of information I share with potential buyers?
Each interested buyer and investor is required to sign a confidentiality agreement prior to receiving detailed information. The agreement restricts how information can be used and to whom they may speak, and prohibits them from hiring your staff for a period of time. In addition, we work with the top executives and investment groups of the acquiring companies and can restrict sharing of information with division-level staff in your market(s).

Who are the buyers? Who are the investors?
The buyers of homebuilding companies are generally large public or private homebuilders. Their motivation for buying a company is to enter a new market without stumbling, or to expand in a market where they already have operations, possibly with a different product type or price point. Michael P. Kahn & Associates, Inc. works with the top executives of these companies, and has completed many transactions with the most aggressive buyers.

Currently there are a large number of Hedge Funds and Private Equity Groups looking to enter the “Homebuilding Space” through a buy-in into a well-managed homebuilding company.
The ideal candidate will possess:

  • An excellent long-term franchise and reputation for delivering quality product at reasonable prices
  • Continuing access to land and lots
  • Experience managing in the full spectrum of housing market conditions
  • A strong senior management team willing to continue with the business for at least 5-7 years
  • A strong bench of mid-level managers to support the senior team
  • An information and accounting system that is up to date, and able to generate management reports on a frequent basis
  • A strong interest in growing the operation and capitalizing on opportunities to buy lots and/or communities arising as a result of the housing downturn.

What will happen to the loyal team I have assembled?
The stories of buyers acquiring companies and letting go of all the staff are mostly from long ago, and were very limited in the first place. Buyers and investors we work with recognize the importance of human capital, and want to avoid losing talented people with local market knowledge. They are making an acquisition or investment to avoid stumbling in a new market, and are relying on your team’s expertise. Your key staff will probably be asked to sign employment agreements which keep them on for a stated minimum period of time and create incentives for them to continue to do a great job growing the company.

How long does Michael P. Kahn & Associates, LLC.’s process take?
Our clients are often surprised how fast we move. From the point of a signed engagement letter and receipt of your retainer, we assume 30 to 45 days to prepare marketing materials, another 30 to 60 days to actively market a company and obtain one or more letters of intent from buyers and investors, and another 60 to 120 days to close the transaction. Our team supports each stage of the process, preparing the marketing materials, providing you with regular updates on the marketing process, setting up and attending appointments for visits by prospective buyers and investors, and negotiating the business agreement and tax treatment.

Working with the Hedge Funds and Private Equity Groups newly entering “the Homebuilding Space” requires an additional 30-45 days beyond the normal timeframe described above. The additional time allows for the Fund Managers to establish working relationships with prospective builder partners.

How does Michael P. Kahn & Associates, LLC. get paid for its services?
We charge a flat fee plus travel expenses for our on-site valuation visit. We charge by the hour while we are developing your marketing materials, actively marketing your company, and negotiating and closing your transaction. The hourly charges, which are billed monthly, are offset 100% against our transaction fee payable at closing. Our transaction fee is the higher of a percentage of the total purchase price or a minimum fee, and sometimes an additional fee for exceeding stated multiples of book value.

I would like to buy a percentage of a company

How can Michael P. Kahn & Associates, LLC. help me buy a company?
Approximately 40% of Michael P. Kahn & Associates, LLC.’s business now is representing buyers in a focused search for candidates in the markets they choose, using the pricing, product and other criteria they supply. Our team can provide market research support to assist you in deciding which market(s) to target. Michael P. Kahn & Associates, LLC. utilizes local contacts in the market and rankings of top builders to create a starting list, then researches each to evaluate the fit with your criteria. We arrange for confidential agreements to be signed, strategic and financial information to be exchanged, set up conference calls and/or site visits, establish valuations of our clients’ preferred targets, and negotiate the transaction. We continue to support the transaction through closing to address any concerns that arise during due diligence.

How does Michael P. Kahn & Associates, LLC. handle confidentiality concerns?
Our team considers every client’s strategies and plans for expansion as confidential. We are careful to avoid taking on an assignment which would conflict with another ongoing assignment in terms of market and scope of work. We utilize two-way confidentiality agreements for most buyer and investor assignments, which restrict the use of the shared information, who may be contacted, and prohibits both our client and their prospects from hiring each other’s staff for stated time periods. Meetings with prospects are typically held off-site.

How long does Michael P. Kahn & Associates, LLC.’s process take?
The time frame varies according to our clients’ needs. Market research in support of selecting a market to target can take several weeks to a couple of months, depending on the number of markets to be researched and compared. Once a market is selected, an initial list of potential candidates is completed within two to three weeks. Contacting prospects, obtaining detailed financial and strategic information and setting up conference calls or visits usually requires one to three months, depending on the number of candidates and our clients’ availability for travel. Valuations and formulating offers may take one to two weeks according to the number of candidates and schedules. The due diligence period and closing date are negotiated according to our client’s sense of timing to complete the review, and familiarity with the market.

How does Michael P. Kahn & Associates, LLC. get paid for its services?
We charge by the hour for our work in market research, identifying and contacting prospects, arranging and participating in conference calls and visits, negotiating and closing a transaction. These hourly charges are billed monthly, and are 100% offset (excluding travel, data and other approved expenses) against our transaction fee payable at closing. Our transaction fee is the higher of a percentage of the total purchase price or a minimum fee, with a declining fee structure for subsequent transactions.