Sale of a privately owned, owner managed company is for most people a rare or even once in a lifetime event.
Accordingly, there is no second chance to get it right.

Timing Is Important to Maximizing Price

• Accelerating growth and accelerating earnings lead to higher prices.
• Robust stock markets and low interest rates lead to higher prices.
• Multiple buyers lead to higher prices.
• Strategic buyers generally pay higher prices.

The Period of Sale Is a High Risk Period

The period of sale is a high risk period. Accordingly, the process should be kept private. If the process is public: ·

• Competitors will use the fact of sale against the seller in the marketplace.
• Competitors will try to disrupt or acquire the sales force by citing employment uncertainty. ·
• Management and employees will lose focus, driving operating and financial performance down just when it is being measured and thus adversely impact selling price. ·
• The period of sale typically lasts a number of months and is subject to unexpected events. ·
• The sale process should be managed in a way that minimizes risk.

Early Valuation Measures Price Acceptability

A valuation is performed at the beginning of the project to determine whether there is interest in selling at that amount. ·

• Value is a concept that is independent of price; it is a conjecture about worth, which is ultimately different from what buyers may be willing to pay. ·
• Our process seeks the highest price; sometimes price in excess of "value" is achieved.

Price Varies with Certainty

• A certain price at closing is typically less than an uncertain price (e.g., earn-out or a deferred price). ·
• Price that is subject to future adjustment on account of representations, warranties, or covenants is not certain. ·
• Price that is subject to financing is not certain.

The Hankin System Seeks Highest Certain Price

The Hankin system strives to achieve the highest certain price under market conditions with the least risk to the company. ·

• A valuation range is determined to assist the client in reaching a decision and us in negotiating maximum price. ·
• Preliminary price target is selected--go/no go decision. ·
• An offering book is prepared. ·
• A preliminary list of strategic and financial buyers is prepared.
  • Competitors are carefully screened and may be excluded.
  • Buyers have to be qualified.
  • Confidentiality agreements are secured.
  • Offering books are circulated.
  • Each recipient is personally contacted by a principal of the firm, and interest is developed where possible.
  • Written expressions of interest are sought, including estimated price and terms--go/no go decision. ·
• An offsite due diligence room is created so that parties proceeding to contract do not have to visit the facility.
  • Customer lists, vendor lists, and sales force and organization personnel lists are not shared until a buyer is selected and under contract.
  • Senior management may be involved in the process at some time, but only after they have been appropriately incentivized and properly rehearsed. ·
• We prefer to go directly to agreement in principle.
  • If possible, at least three buyers are driven to contract before one is selected to support maximum price and best terms--go/no go decision.
  • It is important to have sophisticated corporate counsel and tax advisors engaged for transaction design and protection purposes; we can assist in selection if required.
  • We locate financing senior to the buyer's equity investment, if necessary, and are available to close a desired transaction.
  • We help design an appropriate transition plan ·
• We manage the deal through the closing and provide aftercare if there are any unsatisfied conditions. ·
• Should the client desire, we can refer specialists to manage the proceeds from the transaction.

Should a single buyer already be identified and favored by the seller, we customize our system to the circumstances to achieve maximum price and best terms under such conditions.

Telephone  (310) 556-4422     Fax  (310) 276-9414