American home building—a land of unlevel playing fields, boom-and-bust shooting stars, larger-than-life personalities, and impossible dreams come true—has lost a giant.

Michael P. Kahn, who for more than three decades played matchmaker, marriage-broker, king-maker, and empire builder among scores of home building's entrepreneurs, deal junkies, and strategic geniuses, died July 1, 2020, at age 84, after a long illness.

Age and ill health caught up with Michael and slowed him down over the past several years, but never quite knocked him out. I talked with Michael as recently as this past spring, and he mentioned that he had a couple of LOAs—letters of agreement—in the works for upcoming deals.

What Michael Kahn had that neither age nor illness could diminish nor negate, from his start as a go-between between home building's buyers and sellers in 1988 to his final deals in 2018 and 2019, was at least one inextinguishable characteristic: trustworthiness.

"I can dial Don Horton's or Stuart Miller's or Sheryl Palmer's number right now, and they'll pick up my call and talk to me," Michael told me in one conversation a few years back. "They know when my name comes up on their caller ID, I have something to talk with them about they want to know."

In a sector whose key players—ranging from pickup-truck bootstrappers to Fortune 100 publicly traded enterprises—profess constantly that "it's a people business," Michael Kahn will be remembered as the epitome of home building's human factor—integrity, competence, value. What set Michael Kahn apart? Most players in home building's business community fixate on dirt--home sites, developed or raw. Kahn did not ignore that, but focused as well on what one builder did with the dirt that another did not, and why.

In fact, Michael Kahn's business thesis, one that formed the foundation of more than 110 mergers and acquisition transactions, stood apart from conventional principles of home building firm valuation.

While, to this day, capital and strategic investors tend to put a dollar figure on tangible, and to a lesser degree, intangible but nameable assets, Michael Kahn—who had his wife Loretta as a business and strategic partner throughout a storied career—believed builders "fair market value" derived from particulars and specifics on both the seller and the buyer side of the deal equation.

Michael Kahn knew from direct experience what it is to succeed, fail, and go broke as a home builder in the U.S. That experience galvanized both a view and a mission to match human and operational worth with money and power to give firms rampway through the gravitational vertigo of real estate cycles.

He explained this in a way that is ever-relevant—especially as home building firms face existential uncertainty due to the twin crises of COVID-19 and the economic disruption—in valuation:

A successful buyer’s motivation for acquiring a builder can, and almost always does, result in a determination that a seller has significant intangible value to them which may not exist for other buyers. Intangible value that does not exist if one values a builder in a vacuum, which it appears that Jamie is doing.

Several examples:

  • A buyer may not have a presence in a market that they feel they need to enter. They can do a start-up and hence pay the dreaded “dumb tax” or they can do an acquisition and hit the ground running, generating book profits almost, if not, immediately. The value they attach to avoiding the dumb tax adds to the price they would be willing to pay, even if it generates goodwill.
  • The acquisition may be defensive in nature. By acquiring a builder in a market they already have a presence in, the acquirer may be able to keep a competitor from entering that market. This has a value to the buyer which adds to the value of the seller.
  • A buyer may be able to gain significant market share in an existing market. If the “8oo-pound gorilla” in a market is for sale, a buyer can become the 2,000-pound gorilla giving them a significant advantage in, among other things, land acquisition. This also can also have the effect of keeping others from entering a market.
  • A buyer may have a weak management team in an existing market, whereas the seller has a highly respected and talented management team with great relationships with the major land sellers.

Again this is an intangible assets which adds value to the seller. These are but a few examples of what we have seen. There are many more, but space dictates that we cite only a few.

From experience we know that every potential buyer will value a builder differently for the reasons outlined above and that’s why we reach out to about 30 potential acquirers when we represent a seller.

Underlying this explanation, Michael's philosophy, practice, discipline, and rigor focused on work to truly understand how a combination of companies would "fit" together, how human cultures would mesh, how values and principles that each company prioritize would marry.

All of this work—together with the net tangible value of the lot pipeline, the operational congruence, the local scale-ability, the customer segmentation platforms, the real estate cycle-timing, and the age-demographics of the principals involved who may be motivated toward an exit plan—put a signature human factor into the very worth of many companies, often named after a family patriarch founder.

One thing Michael Kahn almost, but not quite, succeeded in was retirement.

In a 2014 BUILDER profile, Les Shaver wrote about Kahn's "Second Coming."

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.

Michael Kahn crossed a milestone that may never be matched in September 2013, his 100th M&A transaction. Ironically, the deal involved Century Communities, which acquired Austin and San Antonio-based Jimmy Jacobs Homes. Dale and Rob Francescon, co-CEOs of Century Communities, annointed Michael, "the dean of home building M&A."

Michael P. Kahn—like Walter Johnson, Ty Cobb, Barry Bonds in a different field of dreams—was the best of the best. He will be missed as a business person. He will be missed for his way of understanding and trading on the science, art, and humanity of a good deal.

And I will miss Michael's voice, his gentleness, his sharp eye and keen ear for who he was in conversation with and what that person was trying to say. Michael P. Kahn was and will be forever remembered as a personification of what makes home building a people business.