Even a legend needs help.
In the past two decades, Michael Kahn has forged a reputation as one of the premier matchmakers in home building. When a company wanted to sell, he found them a buyer. When a builder wanted to establish a foothold in a new market, Kahn uncovered a willing seller. But he hasn’t done it alone.
Over the years, he’s had a strong support team with him, including Peter Hazeloop, his financial analyst; Joe Walsh, his operations person; Jill Firth, his buyer representative; Jody Kahn, his daughter and former producer of executive summaries and market studies for sellers (now SVP at John Burns Real Consulting); Jim Sack, of the The Sack Law Firm and his attorney for more than 90 transactions; and Dr. Loretta Kahn, his wife, a former CIA consultant and deputy director at the Office of Personnel Management, and his “people insight person.”
“I never go on any business appointment without Loretta,” Kahn says. “She is superb at reading people, much better than I am, and that's a very important part of our business and our great success rate.”
With that team in tow, Kahn is in the midst of yet another, unplanned act in home building. After his 20-year home building business fell apart, he pushed his way into the center of the dealmaking universe through pure determination. He stayed there for 20 more years. Now, after a brief respite, he’s back for more at 78 years old.
Calling It Quits
Kahn’s business ground to a halt during the recession. With builders more concerned about keeping their doors open than buying competitors, Kahn decided to retire from mergers and acquisitions (M&A) in January 2011.
“The market was crappy,” says the originator of more than 105 transactions worth $6 billion. “I had enough money to retire gracefully.”
Kahn’s says his post-work life was fulfilling. He rekindled a childhood interest by taking acrylic painting lessons. He learned Italian and read books that went beyond business and homebuilding. And, most importantly, he spent time with his wife, children, grandchildren, and great grandchildren. “I was perfectly happy in my retirement,” he says.
In October 2012, he got a call from an old friend— Marty Gillespie of Pittsburgh-based Heartland Homes—who needed what Kahn calls a “liquidation event.” “I thought it was an opportunity to help an old friend, make a nice fee, and go into retirement again,” Kahn says.
Kahn closed the sale of Heartland to Reston, Va.-based NVR on Dec. 31, 2012. “Then in January, it seemed the floodgates opened and all of a sudden, I started to get call after call after call,” he says.
Since then Kahn has completed nine deals, including representing Atlanta-based Crown Communities in its sale to Ft. Worth-based D.R. Horton and Scottsdale, Az.,-based AV Homes in its purchase of Orlando-based Royal Oak Homes earlier this year. His calls came from both buyers who were motivated to return to markets they exited, enter new markets, and grow their footprints in their existing locations, according to Kahn. On the seller’s side, he sees aging leaders who don’t want to ride another market cycle and younger builders who are motivated to get out because they don’t want to take on liability and are having difficulty securing bank debt. “They just don’t have the capital to compete with bigger better capitalized builders,” Kahn says.
50 Years of Experience
Kahn started building homes more than 50 years ago in Arizona. By the 80’s he had moved to Texas, but like many real estate professionals in that market, ran into trouble. “I got killed in the downturn in early 80’s and ended up losing everything I made since I started in 1962,” he says. “I had no capital and ability to get bank debt.”
He also owed back taxes, which put him in a tight spot. Even though he was offered good jobs it would be hard to pay Uncle Sam and support himself working on a salary for someone else. He knew he needed to do something bigger. That opportunity came on the way home from the 1988 International Builders Show in Dallas. On the plane ride back to his new home in California, Kahn went through the BUILDER 100 and circled the companies that didn’t have a stake in California. He decided to write CEOs of 72 of these companies and offer his services in getting into The Golden State. “It didn’t make sense that only three builders had a major presence in California,” he says.
A career in mergers and acquisitions [M&A] was born. “I got 18 positive responses,” he says. “Within months, I was able to close a couple of transactions.”
By 1993, interest in home building M&A had blossomed and Kahn position himself to be a pivotal cog in these deals. Though he had squared up with the IRS in 1992, Kahn continued sending letters. In 1996, he mailed Dale Francescon and his brother, Robert, owners of Denver builder Trimark Communities.
“We received an unsolicited letter from Mike in terms of laying out all of the reasons that a home builder might want to sell his company,” Dale Francescon says. “As a result of that we met Mike and we ended selling that company to D.R. Horton in 1996.
When the Francescons were restarting home building operations in 2002 under the Century Communities banner, they hired Kahn to find a financial partner. After Century Communities went public last year, Francescon has worked with Kahn on his 2013 purchase of Austin-based Jimmy Jacobs Homes and his 2014 purchase of Houston-based Grand View Builders (Kahn represented Grand View in the deal).
“He’s kind of the dean of home building M&A,” Francescon says. “He understands home building like very few people. I’ve also used him as a resource. Even when he wasn’t doing a specific transaction, I’ve always reached out to him for his input and his thoughts.”
While Francescon says Kahn is as relevant as ever, the question remains: How long will Kahn deal with the tiresome negotiations and due diligence required to complete a home building deal? Kahn has been able to keep up with his family and plans to keep working until it becomes too intrusive. “Maybe it will slow down naturally,” he says. “I don’t know. In the meantime, I enjoy it.”