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Multiple factors lead one to consider the sale or merger of a business, including the following:

  • Rapid growth requires additional investment for working capital, increasing risk
  • Ownership is of an age that suggests retirement with no kin following in the business
  • Industry consolidation looms, changing the competitive framework
  • The future is more competitive and less certain
  • The marketplace presents an opportunity to maximize seller value

Hankin & Co. follows a proven, systematic approach to seller representation to assist sellers in achieving maximum value from the company. The Hankin process progresses through six identifiable phases:

 

 

Phase 1 - Align Goals and Strategy

  • Facilitate an agenda-driven meeting with owners and, where appropriate, management
  • Clarify the goals of the sale; understand company needs and industry dynamics
  • Define niches and unique opportunities
  • Achieve time compression to facilitate earliest execution and closure

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 sale or merger. This Phase 1 review leads directly and logically to development of the sale characteristics that will generate maximum value for the seller in a timely manner while supporting the strategic focus of the company.

 

 

Phase 2 - Valuation and Analysis

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. The Hankin team of valuation experts uses proprietary valuation models to determine a preliminary value estimate of the client business to determine whether there is interest in selling at the valuation amount. The actual selling price may exceed the value, depending on sale and synergistic characteristics.

Value analysis provides information used to:

  • Determine current market impact on valuation
  • Compare the seller's assessment of value
  • Test management's key assumptions that drive future value
  • Assess the value drivers of the company

Hankin proprietary valuation models measure and assess:

  • Market comparables
  • Transaction comparables
  • Public company and industry guidelines
  • Discounted cash flow
  • Costs and enhancements from the sale

While the Hankin proprietary valuation models provide indications as to the value of a company, price will ultimately be determined by:

  • Management's ability to execute its business plan
  • Conditions in the economy and industry
  • Customer demand trends
  • Technological innovation
  • Buyer's view of enhancing enterprise value

 

 

Phase 3 - Descriptive Memorandum

  • Research the company's industry to determine the key competitive players, current market size, and growth projections
  • Become intimately familiar with the company, its opportunities, and its future goals and value drivers to adequately communicate to prospective buyers
  • Compile data describing the company and its processes, market, strategic objectives, and other relevant information to be featured in the company descriptive memorandum
  • Manage due diligence process

Although Hankin prepares the descriptive memorandum, we work directly with the client to build this document, which becomes the initial primary informational resource for interested buyers.

Hankin assists the client in identifying and organizing the information that will assist potential buyers in their due diligence efforts. An off-site due diligence room is created at the appropriate time so that parties proceeding to contract do not have to visit the facility to conduct initial due diligence.

 

Phase 4 - Search, Assess, and Match Potential Buyers

The strategic review and compilation of the company descriptive memorandum lead directly and logically to the parameters used to identify potential buyers. The parameters 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 buyer must successfully pass before being considered.

The Hankin firm works directly with the client to formulate those parameters and to design from them a set of search criteria.

  • Build a database of potential buyers including information such as:
    • Updates of any new information or significant events shaping the competitive landscape
    • Additional updates regarding Hankin contact with sources and narrowing of field

The database allows the firm to maintain current information, track industry trends, and quickly identify potential buyers having a high likelihood of being an appropriate "match."

As potential buyers are identified, Hankin professionals work with the client to prepare to present the opportunity by developing:

  • A contact letter that properly identifies the client's appropriate industry niche and briefly describes the acquisition opportunity
  • An executive summary describing the opportunity

 

 

 

Phase 5 - Follow Up with Potential Candidates

  • Obtain confidentiality agreements and send a company descriptive memorandum to each of the interested parties for evaluation
  • Respond to questions and provide additional information
  • Prepare client and management for site visits by prospective buyers by reviewing the defined strategy, objectives, and deal status.

Upon completion of site visits, the Hankin firm works with the client to assess the indications of interest by prospective sources and to select the finalists.

 

 

Phase 6 - Execution and Closing

Time is the enemy of all deals. The Hankin firm drives the process accordingly.

Hankin professionals help the client develop a detailed, aggressive, realistic time and responsibility schedule with accountabilities.

  • Hankin professionals assist the client and are involved throughout all phases of negotiations
    • During Stage 1 of negotiations, initial possibilities are explored and a letter of intent is signed
    • During Stage 2 of negotiations, agreement is reached on the transaction, and the transaction is driven to close

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Fees

  • Fees are quoted based on the complexity of the project and consist of a retainer and success fees on a per-transaction basis. Retainers normally range from $50,000 to $150,000. Success fees are generally based on a percentage of the sale price.
  • Fees are structured with input from the client to ensure that incentives are consistent with client objectives.


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

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