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Sample Investment Structures
Unlike most buyout firms who typically buy and sell companies for quick profits, HPI Holdings has over 11 years of history in maintaining long-term relationships with its portfolio companies and their operating partners – partners who often retain significant equity in their businesses and enjoy a second or third opportunity for increased liquidity.
H.P.I Holdings structures transactions to give effect to sellers’ divestiture plans and estate planning considerations, allowing management and/or second or third generation family members to take equity positions in their companies.
Our hallmark can be characterized in one word – flexibility – and is best exemplified in the over 200 transactions we have completed to date. Some examples:
Multiple liquidity events. H.P.I Holdings acquired with the selling family a service business. The sellers received mid-seven figures and retained 50%. Eight years later the business was sold to the management and the existing owners. The original selling family received about 1.4 times their original sale price proceeds for their 50% and retained 40%. Five years after that event, it was sold again to third parties for about nine times the original sale proceeds, another huge payday for the family.
Management buy-out. When one of two 50/50 partners wished to retire from a profitable international company for health reasons, we arranged a transaction in which the two owners were bought out; one of the two and the son of the retiring partner each acquired 30%, key management acquired 10% and H.P.I Holdings the remaining 30%
Succession planning.A father and son owned a financial services firm but the father was no longer active. We arranged a purchase of the business from both and the son remained as president and owned 20% of a much larger company that we helped him expand.
Estate planning.Two families each owned 50% of a very successful 40+year old specialty apparel company. In order to provide for estate planning and current liquidity, we arranged a transaction that provided cash and deferred payments to all of the sellers. Each family retained 30% of the new company with the active second generation increasing their ownership percentage; key management employees acquired 10% and H.P.I Holdings the balance.