By Alison Rice. A few years ago, when the Lewis family began discussing the future of their California home building business, selling represented just one of their choices.
"We were entering a period where we were exploring all our options: buying another company, going public, taking on debt, or merging," says Randall Lewis, formerly of Lewis Homes. "Most people in the company thought we'd do nothing. That was the 50-50 outcome."
The Lewises ended up selling the company, which built some 3,000 homes yearly in California and Nevada, to KB Home for nearly $500 million. With capital costly and land increasingly expensive, "we decided maybe it was a better time to be a seller than a buyer," Lewis says. Here's his advice for builders doing the same:
Be open with your employees and stakeholders. "We didn't want there to be rumors," says Lewis, so the family was up front with workers about the variety of ideas they were considering.
Use professional advice. "The Wall Street firms are expensive, but they earn their fee" by guiding sellers through the process, creating interest among potential buyers, and advising on deal details, says Lewis, whose family retained Salomon Smith Barney. "We were only going to sell Lewis Homes once, but the people we were selling to were used to buying other companies."
Deal from a position of strength. "We controlled close to 20,000 lots, so we [knew we] could do nothing and still have seven to eight years of [land] supply left," Lewis says.
Plan for the future. "For us, it wasn't a case of 'sell the company on Friday and go fishing on Monday,'" says Lewis. Instead, he worked for KB with one of his brothers.
Today, Lewis works for his family again, serving as executive vice president of marketing for the Lewis Group of Cos. Based in Upland, Calif., the group builds apartments and shopping centers and develops land. "There is life after the sale," he says.
Published in BIG BUILDER Magazine, October 2002