# Potential Merger & Cost Synergy Analysis Discussion

**February 26, 2026 at 12:01 PM** · 67m 27s · Participants: Patrick Lawlar, James Adcock, Stefanie Bourne, JD Busfield, James Adcock, Sean Griffin

### Bottom Line
Avon and HPP teams discussed a potential merger of their operations, focusing on a detailed financial model showing significant cost synergies and a proposed 721 tax-free reorganization structure. The key unresolved issue is assigning valuation and ownership percentages based on asset contributions.

### Key Takeaways
- **Financial Model:** A combined entity could achieve ~$15M in payroll savings (headcount from 316 to 177) and $0.8-$1.2M in insurance savings, projecting $8M EBITDA in 2026.
- **Proposed Structure:** The transaction is envisioned as a 721 tax-free reorganization, contributing assets/operations into a new clean entity to limit successor liability.
- **Union Considerations:** Significant headcount savings are modeled as duplicative role elimination; union CBA treatment remains a complex diligence item with potential upside.
- **Atlanta/TR Status:** The Atlanta operation (TR) is presented as a 'toggle' option, with its inclusion dependent on further analysis of synergy vs. obligation.

### Decisions Made
- Decision to wind down New Mexico operations — *decided by Speaker E*

### Action Items
- [ ] Send over the financial model and presentation materials shared during the call for HPP team review. — @JD Bs / Avon Team `high`
- [ ] Follow up via email with detailed questions reconciling lease schedules, payroll details, and debt overview (investor lines of credit). — @Ste `high`
- [ ] Schedule a follow-up meeting to discuss valuation methodology, ownership percentages, and the summary term sheet framework. — @Ste `high`
- [ ] Collaboratively analyze combined sales structure and identify potential savings beyond the ops/fleet focus in the initial model. — @Sean / JD Bs `medium`
- [ ] Provide more detailed personnel information for a deeper analysis of duplicative roles and true payroll synergy potential. — @Ste / HPP Team `medium`

### Topics
Merger Financial Model, Cost Synergies & Headcount, Transaction Structure (721 Reorg), Union Agreement Diligence, Atlanta Operation Strategy, Lease & P&L Reconciliation, Valuation & Ownership Framework

**Sentiment:** neutral

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*Generated by Call Assistant on 2026-04-09 11:44*