I want to sell all or some of my company
How does your process work?
Our highly successful process starts with a valuation, what we call Phase 1 of an engagement. We want to be sure that we can meet our clients’ expectations before we take an assignment. If you are in agreement with our valuation and wish to move forward, we enter Phase II of our engagement which consists of developing your marketing materials, actively marketing your company, and negotiating and closing your transaction. For more information on our valuation process go to “How is my company valued? How are my assets valued?” For more information on Phase II go to “I’m pleased with your valuation of my company; what happens next?”
How is my company valued? How are my assets valued?
Our valuation process starts with a visit by one or more of our partners over one or two days. During the visit we will learn about the company, its history, structure, management team, market position and reputation. We will review financials and visit your communities in order to identify factors affecting the value. We will also work with you to prepare an input schedule, on a community by community basis. This provides us with the data we need to prepare financial projections.
Shortly after the visit, you will receive an analysis detailing the valuation and approaches used in establishing the valuation, as well as any structuring details which would affect the valuation. We will explain to you how we applied the three or four approaches—those used by buyers and investors—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 flat fee for this service, and there is no commitment to engage HWAA for any additional services. Valuations take approximately one month from start to finish.
Because of our extensive experience, we get regular feedback on the accuracy of our initial valuations. HWAA continuously meets, and frequently exceeds, our clients’ expectations.
I’m pleased with your valuation of my company; what happens next?
If you approve the valuation report and elect to move forward, we will move into Phase II of our engagement. A flat fee is charged for Phase II to include all additional work and travel time. No other fees will be due other than approved expenses until the closing of a transaction.
We will work with you or your internal staff to help them write an Executive Summary, Market Analysis & Market Data, and one of our partners will work with you to prepare a Financial Presentation consisting of one or two years of historical financial data and five years of pro-forma financial information.
After acceptance by you of the presentation package, our role shall be strategic in nature and shall consist of contacting approved potential purchasers, arranging for and participating in warm-up telephone conferences, arranging for and attending face to face meetings with interested candidates, negotiating terms sheets, letters of intent, binding agreements (subject of course to your legal counsel’s input and your approval), and finally a closing.
It generally takes five to six months from the start of Phase II to the closing of a transaction.
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; 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 Non-Disclosure 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. HWAA 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 employees may 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 HWAA’s process take?
Our clients are often surprised how fast we move. After we complete our valuation, and if you decide to move forward, from the point of a signed engagement letter and receipt of your retainer, we assume 45 to 60 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 HWAA get paid for its services?
We charge a flat fee plus travel expenses for our on-site valuation visit or Phase I of our engagement. We charge an additional flat fee for Phase II which includes developing your marketing materials, actively marketing your company, and negotiating and closing your transaction. The fees paid for both Phase I and Phase II 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.
I would like to buy a percentage of a company
How can HWAA help me buy a company?
Approximately 20% of HWAA’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. HWAA 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.
How does HWAA 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 restricts 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 HWAA’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 HWAA get paid for its services?
We charge a flat fee plus travel expenses, if any, for our work in market research, identifying and contacting prospects, arranging and participating in conference calls and visits, negotiating and closing a transaction. The up-front fee is 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.