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

Valuations of Homebuilding Assets & Operations

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.

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.

Preparation of Strategic Business Plans

Business Plans A Strategic Business Plan is a critical tool in attracting new capital to your homebuilding business. The Plan articulates where you’ve been, where you are today, and your goals and strategies for capitalizing on your competitive advantages in the future. Some other worthwhile uses of a completed Business Plan are:

Jody can focus on completing your Executive Summary or other marketing documents on a timely basis, without the responsibilities of running a homebuilding business. She stays current on the “hot buttons” relevant to homebuilders and investors, and is able to draw on 18 years of experience through multiple housing cycles as a framework for handling challenging subjects. Jody’s connection with John Burns Real Estate Consulting allows Michael P. Kahn & Associates clients to continue accessing her unique capabilities in developing marketing documents, while also connecting clients with up to date housing market data and analysis at the national, regional and local levels.

Jody’s greatest strengths are working with clients to capture the essence of their story; her ability to identify nuances and competitive advantages that distinguish the company or opportunity; quickly understanding the appropriate spin required to get the real facts out in the best possible light; and using her superb word-smithing skills to write a brief and effective narrative.

Visit the John Burns Real Estate Consulting website to access sample housing reports, sign up for free monthly housing newsletters, and to contact Jody for more information. You may also email Jody at JKahn@realestateconsulting.com

Our Process
New clients receive an Information Request to complete in advance of our on-site visit. A typical visit spans two days, allowing for strategic planning discussions, tours of some of the client’s communities, and a series of interviews with the principals and/or senior managers covering many facets of the business. During the drafting process, clients typically review completed sections prior to receiving a full draft for final review.

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Market Research Support

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.

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.