Companies achieve profitable growth both internally and through acquisition. Growth through acquisition can:

• Accelerate revenue growth
• Cut time to market
• Extend product lines or markets
• Enhance competitive position
• Preserve or improve market share

An acquisition progresses through a series of phases as depicted below. This paper details the activities of each phase.

An acquisition plan must advance the corporate strategy. Therefore, the first requirement for acquisition success is an intensive review and analysis of corporate objectives. Having extensive experience with strategic planning, we add value by helping the client take a hard look at corporate objectives and strategies to focus the role and the impact of the acquisition plan. The Phase 1 review leads directly and logically to development of the acquisition characteristics that will further align and enhance corporate strategy and objectives.

With acquisition characteristics identified, we work directly with the client to design search criteria that support the desired characteristics. The criteria are tested by actual search and match results and, if necessary, are refined accordingly. The initial search may identify many potential targets; we establish a number of critical gates through which a potential target must successfully pass before being considered.

This business review process emphasizes identified client criteria, such as potential for revenue growth acceleration, enhanced market and competitive positions, and technology and product extension. The process also incorporates a comprehensive review of all other major aspects of the target company's business, including performance history, policies, products, strategy, objectives, systems, processes, and risks.

The objective of this comprehensive assessment is to identify and eliminate as early as possible those opportunities that will not succeed. The resulting potential targets have a high likelihood of becoming the appropriate "match." Hankin has developed proprietary valuation models, which are used to assess acquisition targets. We also use the valuation models to assess acquisition price and to structure the business combination.

Working with counsel, we assist the client in framing a non-binding but energizing indication of interest in the target company. We also assist the client in negotiating the best price and terms. A letter of intent including a required exclusivity provision is created before the client undertakes full-scale due diligence.

We believe that time is the enemy of all deals, whether we are buying or selling, and we drive the process accordingly. In Phase 4 we help the client develop detailed, aggressive, realistic time and responsibility schedules with accountabilities identified by name. We employ a proprietary, computer-based due diligence management system that tracks receipt of requested materials, tracks status of reviews, and generates the first draft of contract schedules.

If needed and agreed upon as part of our engagement, we assist in arranging institutional financing for the acquisition. (We do not underwrite public offerings or syndicated private placements.) We also assist as required and as appropriate in the closing process, including being available to monitor the process of satisfying closing conditions. Hankin can also review and validate paying agent instructions and models for the determination of amounts of each selling shareholder's portion of adjustments.

Many appropriately priced and successfully closed transactions fail because the acquired business is not effectively integrated. Hankin has expertise in integrating disparate organizations, businesses, projects, and programs. We help the client achieve a highly productive organization in which the existing and acquired entities share aligned vision, goals, objectives, and strategies.

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Hankin & Co. has the expertise to accomplish acquisition and integration quickly, without the year or more it would take to build a competitive internal corporate development department. Our experience spans the entire spectrum of acquisition challenges, and our services incorporate a complete and proven process:

• Focused inquiry to assure alignment of acquisition goals with company strategy.
• Search, assessment, and match, including design of target screening criteria and proprietary models to assess the value of the target and the projected impact of the acquisition.
• Deal structure and financing
• Deal management, including negotiation and management of company personnel and professionals in due diligence, legal, and accounting, through execution and closing.
• Post-acquisition integration of the acquired company.

These services are negotiated with retainers ranging from $50,000 to $150,000 per quarter plus completion or success fees structured to align incentives with client objectives.

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