Mergers and Acquisitions Basics book cover

Mergers and Acquisitions Basics

Negotiation and Deal Structuring

Negotiations form the heart of mergers and acquisitions efforts, for their conclusions contain both anticipated and unforeseen implications.  Don DePamphilis presents a summary of negotiating and deal structuring that captures its dynamic process, showing readers how brokers, bankers, accountants, attorneys, tax experts, managers, investors, and others must work together and what happens when they don't.  Writtten for those who seek a broadly-based view of M&A and understand their own roles in the process, this book treads a middle ground between highly technical and dumbed-down descriptions of complex events.  It mixes theory with case studies so the text is current and useful.  Unique and practical, this book can add hard-won insights to anybody's list of M&A titles..

Audience

Students and professionals around the world who are studying or working in mergers and acquisitions.  The book is especially useful for readers who seek material that lies between intensive and superficial coverage of these subjects.  It requires only passing acquaintance with finance, economics, business law, and accounting.  

 

Paperback, 240 Pages

Published: September 2010

Imprint: Academic Press

ISBN: 978-0-12-374949-9

Reviews

  • "The author provides clear and thorough explanations of the relevant steps in negotiating and structuring M&A transactions.  This text does a marvelous job of incorporating current events and recent deals to illustrate the key aspects of the deal process."  --Matthew Cain, University of Notre Dame

     


Contents


  • Preface

    Acknowledgments

    Chapter 1. Introduction to Negotiating Mergers and Acquisitions

    Key Participants in Negotiating Mergers and Acquisitions

    Senior/Operating Management

    Investment Bankers

    Lawyers

    Accountants

    Prenegotiation: Profiling the Target Market and Firm

    Profiling the Market/Industry

    Profiling the Firm

    Estimating the Price Range of an Initial Offer

    Prenegotiation: First Contact

    Confidentiality Agreement

    Term Sheet

    Letter of Intent

    Negotiation

    Developing a Negotiating Strategy

    Concurrent Activities

    Refining Valuation

    Deal Structuring

    Conducting Due Diligence

    Developing the Financing Plan or Strategy: The Reality Check

    A Case in Point: Pfizer Acquires Wyeth in an Attempt to Kick-Start Growth

    Chapter 2. Selecting the Form of Acquisition Vehicle and Postclosing Organization

    Alternative Acquisition Vehicle and Postclosing Organizational Structures

    Corporate Structure

    Limited Liability Company

    Partnership Structures

    Equity Partnership or Minority Investment

    Employee Stock Ownership Plans

    Holding Company

    Choosing the Appropriate Acquisition Vehicle

    Choosing the Appropriate Postclosing Organization

    A Case in Point: Vivendi Universal and GE Combine Entertainment Assets to Form NBC Universal

    Chapter 3. Selecting the Form of Payment

    Form of Payment or Total Consideration

    Cash Payment

    Noncash Payment

    Cash and Stock in Combination

    Managing Risk and Closing the Gap on Price

    Postclosing Price Adjustments

    Earnouts and Other Contingent Payments

    Contingent Value Rights

    Distributed or Staged Payouts

    Rights, Royalties, and Fees

    Using Collar Arrangements to Preserve Shareholder Value

    Calculating Share Exchange Ratios

    A Case in Point: Boston Scientific Overcomes Johnson & Johnson to Acquire Guidant: A Lesson in Bidding Strategies

    Chapter 4. Selecting the Form of Acquisition

    Form of Acquisition

    Purchase of Assets

    Purchase of Stock

    Mergers

    Staged Transactions

    Acquisition Agreements

    Representations and Warranties

    Preclosing Covenants

    Closing Conditions

    Indemnification

    A Case in Point: Teva Pharmaceuticals Buys Barr Pharmaceuticals to Create a Global Generic Drugs Powerhouse

    Chapter 5. Tax Structures and Strategies

    Taxable Transactions

    Taxable Purchase of Target Assets with Cash

    Taxable Purchase of Target Stock with Cash

    Section 338 Election

    Triangular Cash-Out Mergers

    Tax-Free Transactions

    Continuity of Interests and Continuity of Business Enterprise

    Requirements

    Alternative Tax-Free Reorganizations

    Expanding the Role of Mergers in Tax-Free Reorganizations

    Tax-Free Transactions Arising from 1031 “Like-Kind” Exchanges

    Other Tax Considerations Affecting Corporate Restructuring Activities

    Net Operating Losses

    Corporate Capital Gains Taxes

    Alternative Corporate Minimum Tax

    Greenmail Payments

    Morris Trust Transactions

    Leveraged Partnerships

    Legal Form of Selling Entity

    A Case in Point: "Grave Dancer" Takes Tribune Company Private in an Ill-Fated Transaction

    Chapter 6. Accounting Considerations

    Limitations of Financial Data

    Generally Accepted Accounting Principles and International Accounting Standards

    Pro Forma Accounting

    Financial Reporting of Business Combinations

    SFAS 141R: The Revised Standards

    SFAS 157: The New Fair Value Framework

    Impact of Purchase Accounting on Financial Statements

    Balance Sheet Considerations

    Income Statement and Cash Flow Considerations

    International Accounting Standards

    Recapitalization Accounting

    A Case in Point: JDS Uniphase-SDL Merger Results in Huge Write-off

    Chapter 7. Financing Structures and Strategies

    Why Financing Structures Matter

    Asset-Based or Secured Lending

    Security Provisions and Protective Covenants

    Cash Flow or Unsecured Lenders

    Types of Long-Term Financing

    Junk Bonds

    Leveraged Bank Loans

    The "Road Show"

    Financing Strategies: Borrowing

    Financing Strategies: Equity and Hybrid Securities

    Financing Strategies: Seller Financing

    Financing Strategies: Selling Discretionary Assets

    Highly Leveraged Transactions

    Common Forms of Leveraged Buyout Deal Structures

    Lender Commitment Letters

    Direct Merger

    Subsidiary Merger

    Reverse Stock Splits

    Legal Pitfalls of Improperly Structured LBOs

    Lender Due Diligence

    Leveraged Buyout Capital Structures

    Estimating the Impact of Alternative Financing Structures

    Selecting the Appropriate Capital or Financing Structure

    The Importance of Stating Assumptions

    A Case in Point: Financing LBOs-The SunGard Transaction

    Chapter 8. The Role of Takeover Tactics and Defenses in the Negotiation Process

    Alternative Takeover Tactics in the Corporate Takeover Market

    The Friendly Approach

    The Aggressive Approach

    The Bear Hug: Limiting the Target's Options

    Proxy Contests in Support of a Takeover

    Pre-tender Offer Tactics: Purchasing Target Stock in the Open Market

    Using a Hostile Tender Offer to Circumvent the Target's Board

    Developing a Bidding or Takeover Strategy

    Alternative Takeover Defenses in the Corporate Takeover Market-Pre-offer and Post-offer Defenses

    Pre-offer Defenses

    Poison Pills

    Shark Repellents

    Post-offer Defenses

    Impact on Shareholder and Bondholder Value of Takeover Defenses

    A Case in Point: Mittal Acquires Arcelor in a Battle of Global Titans

    Glossary

    References

    Index


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