Michael P. Kahn & Associates, LLC.

Buy-ins, Mergers & Acquisitions

Many private homebuilding companies are seeking capital to help them survive the housing downturn, and to purchase assets at deep discounts which will support the growth of the company once the housing market begins to recover.

Fortunately, there are numerous investors and buyers interested in direct investment in homebuilding companies, often as an alternative to buying distressed land assets which the investor may have no experience in managing.

Mergers and acquisitions arranged during the recent housing boom were generally purchases of 100% interest in a company. Now, investors and buyers are interested in acquisitions of a partial interest in a homebuilding company, also called a “buy-in.” The investor or buyer might acquire 51% of a builder, recapitalize the business, and provide some capital specifically to acquire distressed assets. The builder contributes selected assets to the new venture, and may have the ability to earn back some equity as a result of performance. The transaction will provide for multiple exit strategies, allowing either party to exercise an option to acquire the other’s interest, or for the parties to join together in selling the revitalized operation to a third party.

Michael P. Kahn & Associates is the industry leader in arranging and closing mergers & acquisitions for homebuilders. We already have a few partial interest acquisitions underway, and as expected, our experience in valuing homebuilding operations, assessing management teams, and structuring transactions is positioning Michael P. Kahn & Associates as the industry leader for these transactions.  In time, the housing sector will improve, and the public and large private builders which used M&A to support their growth plans will once again be on the lookout for desirable candidates.

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Buyer or Investor Representations

Michael P. Kahn & Associates has assisted numerous national and private homebuilding companies in planning their entry into new markets, or expansion of existing operations, through the merger/acquisition of qualified homebuilding companies with local expertise.  This service is also applicable to investors seeking opportunities for direct investment in homebuilding.

The process may include:  
• Identifying private homebuilding companies in client specified markets
•Winnowing the list to match the client’s criteria, including size in annual deliveries, product type, or price point
• Contacting local homebuilders on a confidential basis to gather information on product, pricing, etc.
• Visits to candidates’ operations to gather financial information, view product, and evaluate competitive position.
• Discussions with local housing experts and brokers
• Prioritizing candidates
• Negotiations with candidates

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Valuations of Homebuilding Assets & Operations

Michael P. Kahn & Associates is especially skilled in developing valuations of homebuilding operations, because we are regularly involved in structuring transactions in the housing sector. We can evaluate a company’s value in terms of current market realities and structures, recognizing that transactions completed in past years may no longer be representative.

Valuations can be useful in considering the sale or merger of a homebuilding business, but may also be used for estate planning and other planning purposes.

To determine a valuation, one of our associates conducts an onsite visit over one or more days, learning about the operation and reviewing financials in order to identify factors affecting the value. Shortly after the visit, our clients receive written reports detailing the valuation and approach used in establishing the valuation, as well as any structuring details which would affect the valuation.

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Divestitures of Divisions or Related Companies

Some homebuilding companies want to sell divisions or related entities which no longer fit with the company’s goals and strategies. Alternatively, divisions or companies may be sold in order to raise capital for pursuit of other opportunities.

Michael P. Kahn & Associates assists in arranging the sale of divisions or related companies, utilizing its extensive contacts in the housing industry.
In many cases, we first prepare a Business Plan or other documents to aid in arranging the sale (see Preparation of Business Plans in the list of services).

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Public or Private Debt Offerings

Michael P. Kahn & Associates helps managers of growing companies recognize their ability to access debt in the public market and through private placements with institutional investors.

We will prepare you for introductions and assist you in negotiations with underwriters, legal and audit firms. We work with the selected team to create a timeline for successful execution.

We will also assist homebuilding companies to renegotiate the terms of existing debt.

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Profitability Analysis and Tune-up

Our experienced team can evaluate your organization and financial performance in comparison to others in the same or similar markets and offering similar products. We can identify areas within your operation that are the sources of slippage in profitability, and we can make specific recommendations for improvement. If required, we can assist in the implementation of revised procedures designed to eliminate the slippage.

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