Managing Partner's Letter

McCann’s Engineering: Following several years of discussions, Kerlin helped the owner/founder come to a difficult and personal decision to sell the company to a strategic buyer. McCann’s was a fifty year old company that supplied nearly all carbonators systems used today for soft drink dispensing in restaurants and theatres. The owner/founder had some very delicate considerations in his decision to sell. He loved the business but because of his age, he knew that someday there needed to be a succession plan but also was very concerned about his customers who the company had served for years. What was designed by Kerlin was a process to identify the best successor owner who could bring not just capital to complete a transaction but also could bring skills and a culture that were appropriate to facilitating the continued growth of the business. This required a highly confidential process and for this reason, Kerlin designed a strategy to approach the very best buyer, establish a dialog at a very high level and to offer the company at a set targeted price. The party that was ultimately approached was Manitowoc Company, a public company in Wisconsin that had a major equipment supply division that was complementary to McCann’s operations. Manitowoc responded immediately as anticipated to the opportunity and they stepped up, responded to our value proposal and acquired the company on the negotiated terms. This was a very deliberate, carefully planned process and focused on strategic value and relationships. While many companies today are sold in an auction process, McCann’s determined with our investment banking advice that it could get a higher price and more transaction certainty in a targeted negotiation that involved only one prospective buyer. This transaction is an example of Kerlin responding to special needs of the client and designing a successful strategy to optimize the situation.

Other Important Assignments: Kerlin also completed several other recent transactions, two of which we can mention here. Kerlin completed in early 2006, the sale of Kings County Truck Lines, the largest milk hauler in the United States, to Ruan Transportation in a very unique roll up of five private companies each with different set of shareholders. We also completed an important sale of an 82% interest in Colliers Seeley International, the Los Angeles based commercial brokerage firm to FirstService Corporation based in Canada. This transaction was very important to the employee owners of Colliers Seeley and the transaction to date has met expectations for both the buyer and the employee owners.

Our firm has grown and evolved over the last year, which was our twelfth year of operation. Kerlin has three senior investment bankers who are acting as Managing Directors: Joe Achenbaum, Drew Webb and myself. Joe, Drew and I have worked together for many years including periods before the formation of Kerlin, and we each bring very complementary skills and experiences to both the firm and our clients. All Kerlin assignments are actively led by one or two of us. Complementing our senior bankers is an excellent professional support team that we have developed here are Kerlin. Ben Sexton, who is an experienced associate, has been an integral resource in many of Kerlin’s recent assignments. Tom Nieto, who completed two very impressive years as an analyst was promoted in May to associate. Congratulations, Tom! Additionally, we have added two new members to the Kerlin team, Carter Morris and De’bora Johnson. Carter joined the firm this year as an analyst. Previously, Carter was a researcher in the pharmaceutical industry for a law firm and is a Stanford graduate. Additionally, De’bora Johnson, who joined the Kerlin team in 2006 as the firm’s controller, manages effectively the firm’s administrative systems.

As Kerlin continues to grow and evolve, we are very optimistic about the firm’s future, as we are currently in the midst of a number of exciting projects. We have wonderful clients as well as many friends of the firm and a talented professional team. We are very proud of Kerlin’s accomplishments to date, we are confident the road ahead will bring opportunities for our clients and we expect to provide meaningful services to our clients in the years to come.