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Mergers and Acquisitions
I’m considering selling my company.
What is my company worth?
Our 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, 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. There is however, no commitment after we do a valuation to engage MPKA to sell your company.
What if the valuation does not meet my expectations?
As part of our valuation process we will determine if your company needs a “tune-up” to maximize the value of your organization. Most acquisitions historically have been by national builders looking to expand their presence in a market or enter a new market. Typically they look for companies that fit a certain profile regarding operations and organizational structure. Our experienced consultants, collectively having over 400 years experience in the homebuilding industry, know what these companies are looking for. They know the actions that need to be taken for your company to fit that profile. Our consultants can do more than just create a plan for you to maximize the value of your organization; they can help you execute the plan.
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 offsite, 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 is required to sign a confidentiality agreement prior to receiving detailed information. The agreement restricts how information can be used, 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 of the acquiring companies and can restrict sharing of information with division-level staff in your markets.
Who are the buyers?
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 paying the cost of going through the learning curve of a new market, or to expand in a market where they already have operations, possibly with a different product type or price point. MPKA works with the top executives of these companies, and has completed many transactions with the most aggressive buyers.
What will happen to the loyal team I have assembled?
Buyers we work with recognize the importance of human capital, and want to avoid losing talented people with local market knowledge. Typically, buyers are relying on your team’s expertise and knowledge of the local market. 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 MPKA’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 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 negotiating the business agreement and tax treatment.
How does MPKA 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’m interested in buying a company
How can MPKA help me buy a company?
Our team can provide market research support to assist you in deciding which markets to target. MPKA utilizes local contacts in the market and rankings of top builders to create a starting list, and 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. Although we do not provide capital ourselves, we may be able to direct you to sources for acquisition capital.
How does MPKA 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 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 MPKA’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 several 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 MPKA 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.
Debt Restructuring
I need to find a new lender to replace my bank loans and I need additional capital to grow my business.
How do we get started?
Our highly successful process starts with a conference call between you and one or more of our Partners to determine what kind of issues you have. Although these calls are informative, they are not really a good way to determine the best solutions for your needs. We want to be sure that we can meet your expectations before we take an assignment. In order to find the best solutions, one or more members of our team will visit for approximately a day and a half with you and other members of your senior management team. We refer to this as an Initial Consultation (“IC”). After we schedule the IC we will ask you to provide us with financial and operational information concerning your business. We will review this information prior to our arrival on site.
When we arrive on site we will want to visit some of your communities, visit models and walk a few homes under construction. Next we will meet with you and your senior management team and thoroughly review your operations and needs. We will discuss your capital needs so that we know what terms and conditions are acceptable to you relative to restructuring your debt or raising additional capital. At the conclusion of our visit we will provide you with a verbal report. We will follow with a written report shortly thereafter. The reports will provide you with feedback about your operations and tell you what help we can provide.
What is the cost for an IC?
Rather than charge a set fee for the IC we charge on an hourly basis for the time we spend with you and for travel time and expenses. One half of the estimated cost will be required as a deposit prior to our visit with the rest paid while we are on site.
What is the next step?
If the results of the IC indicate that we will be able to help you we then prepare an Engagement Letter that spells out what services we provide and how we charge for our services. The Engagement Letter will provide an approximate time line and establish the framework of our business relationship.
How does MPKA get paid for its services?
We charge by the hour for our work in identifying and contacting sources, arranging and participating in conference calls and visits, negotiating and closing a transaction. Once we are successful in closing on a transaction we earn a Success Fee. Our Success Fee is generally the higher of a percentage of the total value of the transaction or a minimum fee.