Mergers, Acquisitions, and Other Restructuring Activities - 5th Edition - ISBN: 9780123748782, 9780080952055

Mergers, Acquisitions, and Other Restructuring Activities

5th Edition

An Integrated Approach to Process, Tools, Cases, and Solutions

Authors: Donald DePamphilis Donald DePamphilis
eBook ISBN: 9780080952055
Hardcover ISBN: 9780123748782
Imprint: Academic Press
Published Date: 26th August 2009
Page Count: 788
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Description

In the fifth edition of this well-known text, Dr. DePamphilis explains the real world of mergers, acquisitions, and restructuring based on his academic knowledge and personal experiences with over 30 such deals himself. Important enhancements unique to the fifth edition: all 99 cases involve real-life deals made or announced within the last five years, extensive discussions of all current valuation techniques and their strengths and weaknesses, cross-border transactions analyzed and explained in detail, tax and legal issues covered comprehensively.

Key Features

  • Focuses on the REAL WORLD, not just theory. The 99 case studies span every industry and dozens of countries and show how deals are done rather than just the theory behind them. All cases fully updated for this edition. Cases all involve transactions that have occurred or been announced within the past 3-5 years.
  • Extensive updating and enhanced content provided on reorganization, bankruptcy, and liquidation issues both inside and outside of bankruptcy court

Readership

MBA and advanced undergraduate and graduate Finance students taking courses in: Mergers & Acquisitions, corporate restructuring, corporate strategy

Table of Contents

Part I: The Mergers and Acquisitions Environment

Chapter 1: Introduction to Mergers and Acquisitions (M&As)

Inside M&A: Mars Buys Wrigley in One Sweet Deal

Chapter Overview

Mergers and Acquisitions as Change Agents

Common Motivations for Mergers and Acquisitions

Merger and Acquisition Waves

Alternative Forms of Corporate Restructuring

Friendly versus Hostile Takeovers

The Role of Holding Companies in Mergers and Acquisitions

The Role of Employee Stock Ownership Plans in Mergers and Acquisitions

Business Alliances as Alternatives to Mergers and Acquisitions

Participants in the Mergers and Acquisitions Process

Do Mergers and Acquisitions Pay Off for Shareholders

Do Mergers and Acquisitions Pay Off for Bondholders

Do Mergers and Acquisitions Pay Off for Society

Commonly Cited Reasons Why Some Mergers and Acquisitions Fail to Meet Expectations

Long-Term Performance Similar for Mergers and Acquisitions, Business Alliances, and Solo Ventures

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Chapter 2: Regulatory Considerations

Inside M&A: Justice Department Approves Maytag/Whirlpool Combination Despite Resulting Increase in Concentration

Chapter Overview

Federal Securities Laws

Antitrust Laws

State Regulations Affecting Mergers and Acquisitions

National Security–Related Restrictions on Direct Foreign Investment in the United States

Foreign Corrupt Practices Act

Regulated Industries

Environmental Laws

Labor and Benefit Laws

Cross-Border Transactions

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Chapter 3: The Corporate Takeover Market: Common Takeover Tactics, Antitakeover Defenses, and Corporate Governance

Inside M&A: InBev Buys an American Icon for $52 Billion

Chapter Overview

Factors Affecting Corporate Governance

Alternative Takeover Tactics in the Corporate Takeover Market

Developing a Bidding or Takeover Strategy Decision Tree

Alternative Takeover Defenses in the Corporate Takeover Market

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Part II: The Mergers and Acquisitions Process: Phases 1–10

Chapter 4: Planning: Developing Business and Acquisition Plans—Phases 1 and 2 of the Acquisition Process

Inside M&A: Nokia Moves to Establish Industry Standards

Chapter Overview

A Planning-Based Approach to Mergers and Acquisitions

Phase 1. Building the Business Plan

The Business Plan as a Communication Document

Phase 2. Building the Merger–Acquisition Implementation Plan

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Appendix: Common Sources of Economic, Industry, and Market Data

Chapter 5: Implementation: Search through Closing—Phases 3–10

Inside M&A: Bank of America Acquires Merrill Lynch

Chapter Overview

Phase 3. The Search Process

Phase 4. The Screening Process

Phase 5. First Contact

Phase 6. Negotiation

Phase 7. Developing the Integration Plan

Phase 8. Closing

Phase 9. Implementing Postclosing Integration

Phase 10. Conducting a Postclosing Evaluation

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Appendix: Legal Due Diligence Preliminary Information Request

Chapter 6: Integration Mergers, Acquisitions, and Business Alliances

Inside M&A: GE’s Water Business Fails to Meet Expectations

Chapter Overview

The Role of Integration in Successful Mergers and Acquisitions

Viewing Integration as a Process

Integrating Business Alliances

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Part III: Merger and Acquisition Valuation and Modeling

Chapter 7: A Primer on Merger and Acquisition Cash-Flow Valuation

Inside M&A: The Importance of Distinguishing between Operating and Nonoperating Assets

Chapter Overview

Required Returns

Analyzing Risk

Calculating Free Cash Flows (D/E)

Applying Income or Discounted Cash-Flow Methods

Valuing Firms under Special Situations

Valuing a Firm’s Debt and Other Obligations

Valuing Nonoperating Assets

Adjusting the Target Firm’s Equity Value for Nonoperating Assets, Debt, and Other Obligations

Things to Remember

Chapter Discussion Questions

Chapter Practice Problems and Answers

Chapter Business Cases

Chapter 8: Applying Relative, Asset-Oriented, and Real-Option Valuation Methods to Mergers and Acquisitions

Inside M&A: A Real Options’ Perspective on Microsoft’s Takeover Attempt of Yahoo

Chapter Overview

Applying Relative-Valuation (Market-Based) Methods

Applying Asset-Oriented Methods

Replacement-Cost Method

Valuing the Firm Using the Weighted-Average (Expected-Value) Method

Analyzing Mergers and Acquisitions in Terms of Real Options

Determining When to Use the Different Approaches to Valuation

Things to Remember

Chapter Discussion Questions

Chapter Practice Problems and Answers

Chapter Business Cases

Chapter 9: Applying Financial Modeling Techniques to Value, Structure, and Negotiate Mergers and Acquisitions

Inside M&A: HP Buys EDS—The Role of Financial Models in Decision Making

Chapter Overview

Limitations of Financial Data

Model-Building Process

Adjusting the Target’s Offer Price for the Effects of Options and Convertible Securities

Factors Affecting Postmerger Share Price

Key M&A Model Formulas

M&A Model Balance-Sheet Adjustment Mechanisms

Applying Offer Price-Simulation Models in the Context of M&A Negotiations

Alternative Applications of M&A Financial Models

Things to Remember

Chapter Discussion Questions

Chapter Practice Problems and Answers

Chapter Business Cases

Chapter 10: Analysis and Valuation of Privately Held Companies

Inside M&A: Cashing Out of a Privately Owned Enterprise1

Chapter Overview

Demographics of Privately Owned Businesses

Challenges of Valuing Privately Held Companies

Process for Valuing Privately Held Businesses

Step 1. Adjusting the Income Statement

Step 2. Applying Valuation Methodologies to Private Companies

Step 3. Developing Discount (Capitalization) Rates

Step 4. Applying Liquidity Discounts, Control Premiums, and Minority Discounts

Reverse Mergers

Using Leveraged Employee Stock Ownership Plans to Buy Private Companies

Empirical Studies of Shareholder Returns

Things to Remember

Chapter Discussion Questions

Chapter Practice Problems and Answers

Chapter Business Cases

Part IV: Deal Structuring and Financing Strategies

Chapter 11: Structuring the Deal: Payment and Legal Considerations

Inside M&A: News Corp’s Power Play in Satellite Broadcasting Seems to Confuse Investors

Chapter Overview

The Deal-Structuring Process

Form of Acquisition Vehicle

Postclosing Organization

Legal Form of the Selling Entity

Form of Payment or Total Consideration

Managing Risk and Closing the Gap on Price

Using Collar Arrangements (Fixed and Variable) to Preserve Shareholder Value

Form of Acquisition

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Chapter 12: Structuring the Deal: Tax and Accounting Considerations

Inside M&A: Teva Pharmaceuticals Acquires Ivax Corp

Chapter Overview

General Tax Considerations

Taxable Transactions

Tax-Free Transactions

Other Tax Considerations Affecting Corporate Restructuring Activities

Financial Reporting of Business Combinations

Impact of Purchase Accounting on Financial Statements

International Accounting Standards

Recapitalization Accounting

Things to Remember

Chapter Discussion Questions

Chapter Practice Problems and Answers

Chapter Business Cases

Chapter 13: Financing Transactions: Private Equity, Hedge Funds, and Leveraged Buyout Structures and Valuation

Inside M&A: HCA’s LBO Represents a High-Risk Bet on Growth

Chapter Overview

Characterizing Leveraged Buyouts

When Do Firms Go Private?

Financing Transactions

Common Forms of Leveraged Buyout Deal Structures

What Factors Are Critical to Successful LBOs?

Knowing What to Buy

Prebuyout and Postbuyout Shareholder Returns

Valuing Leveraged Buyouts

Building an LBO Model

Typical LBO Model Formats

Estimating Borrowing Capacity

Things to Remember

Chapter Discussion Questions

Chapter Practice Problems

Chapter Business Cases

Part V: Alternative Business and Restructuring Strategies

Chapter 14: Joint Ventures, Partnerships, Strategic Alliances, and Licensing

Inside M&A: Garmin Utilizes Supply Agreement as Alternative to Acquiring Tele Atlas

Chapter Overview

Motivations for Business Alliances

Critical Success Factors for Business Alliances

Alternative Legal Forms of Business Alliances

Strategic and Operational Plans

Resolving Business Alliance Deal-Structuring Issues

Empirical Findings

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Chapter 15: Alternative Exit and Restructuring Strategies: Divestitures, Spin-Offs, Carve-Outs, Split-Ups, and Split-Offs

Inside M&A. Financial Services Firms Streamline their Operations

Chapter Overview

Commonly Stated Motives for Exiting Businesses

Divestitures

Spin-offs and Split-Ups

Equity Carve-Outs

Split-Offs

Voluntary Liquidations (Bust-Ups)

Tracking, Targeted, and Letter Stocks

Comparing Alternative Exit and Restructuring Strategies

Choosing among Divestiture, Carve-out, and Spin-off Restructuring Strategies

Determinants of Returns to Shareholders Resulting from Restructuring Strategies

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Chapter 16: Alternative Exit and Restructuring Strategies: Reorganization and Liquidation

Inside M&A: Calpine Emerges from the Protection of Bankruptcy Court

Chapter Overview

Business Failure

Voluntary Settlements with Creditors outside of Bankruptcy

Reorganization and Liquidation in Bankruptcy

Analyzing Strategic Options for Failing Firms

Predicting Corporate Default and Bankruptcy

Empirical Studies of Financial Distress

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

Chapter 17: Cross-Border Mergers and Acquisitions: Analysis and Valuation

Inside M&A: Arcelor Outbids ThyssenKrupp for Canada’s Dofasco Steelmaking Operations

Chapter Overview

Distinguishing between Developed and Emerging Economies

Globally Integrated versus Segmented Capital Markets

Motives for International Expansion

Common International Market Entry Strategies

Structuring Cross-Border Transactions

Financing Cross-Border Transactions

Planning and Implementing Cross-Border Transactions in Emerging Countries

Valuing Cross-Border Transactions

Empirical Studies of Financial Returns to International Diversification

Things to Remember

Chapter Discussion Questions

Chapter Business Cases

References

Glossary

Index

Details

No. of pages:
788
Language:
English
Copyright:
© Academic Press 2010
Published:
Imprint:
Academic Press
eBook ISBN:
9780080952055
Hardcover ISBN:
9780123748782

About the Author

Donald DePamphilis

Donald M. DePamphilis has a Ph.D. in economics from Harvard University and has managed more than 30 acquisitions, divestitures, joint ventures, minority investments, as well as licensing and supply agreements. He is currently Clinical Professor of Finance at the College of Business Administration at Loyola Marymount University in Los Angeles. He has also taught mergers and acquisitions and corporate restructuring at the Graduate School of Management at the University of California, Irvine, and Chapman University to undergraduates, MBA, and Executive MBA students. He has published a number of articles on economic forecasting, business planning, and marketing. As Vice President of Electronic Commerce at Experian, Dr. DePamphilis managed the development of an award winning Web Site. He was also Vice President of Business Development at TRW Information Systems and Services, Director of Planning at TRW, and Chief Economist at National Steel Corporation.

Affiliations and Expertise

Clinical Professor of Finance, Loyola Marymount University, Los Angeles, CA, USA

Donald DePamphilis

Donald M. DePamphilis has a Ph.D. in economics from Harvard University and has managed more than 30 acquisitions, divestitures, joint ventures, minority investments, as well as licensing and supply agreements. He is currently Clinical Professor of Finance at the College of Business Administration at Loyola Marymount University in Los Angeles. He has also taught mergers and acquisitions and corporate restructuring at the Graduate School of Management at the University of California, Irvine, and Chapman University to undergraduates, MBA, and Executive MBA students. He has published a number of articles on economic forecasting, business planning, and marketing. As Vice President of Electronic Commerce at Experian, Dr. DePamphilis managed the development of an award winning Web Site. He was also Vice President of Business Development at TRW Information Systems and Services, Director of Planning at TRW, and Chief Economist at National Steel Corporation.

Affiliations and Expertise

Clinical Professor of Finance, Loyola Marymount University, Los Angeles, CA, USA

Reviews

“This is a truly comprehensive text and does a wonderful job at supplying the underlying motives and theory as well as the critical “in practice” elements that many books lack. It spans all types of Ma and restructuring transactions and covers all the relevant knowledge from the academic research to the practical legal, accounting, and regulatory details. The book is up-to-date and teaches the state of the art techniques used today. The book contains numerous cases and spreadsheet support that enables the reader to put into practice everything that is covered. The combination of great writing and active case learning make this book the best I have seen in the Ma and restructuring arena.”
--Matthew T. Billett, Associate Professor of Finance, Henry B Tippie Research Fellow, University of Iowa

“I am happy to recommend the 5th edition of Mergers, Acquisitions, and Other Restructuring Activities. Having used prior editions of Don DePamphilis’ text, I can affirm that the newest edition builds on a firm foundation of coverage, real-world examples, and readability. My students have consistently responded favorably to prior editions of the book. In the newest edition, I was delighted to discover that Don is expanding his coverage of family-owned businesses, already a strength in his earlier editions that were distinguished by their coverage of the valuation of privately-held businesses. Additional attention is paid to restructuring, bankruptcy, and liquidation as well as risk management, which are clearly topics of interest to every business person in today’s economic climate.”
--Kent Hickman, Professor of Finance, Gonzaga University, WA

“This new edition is one of the most comprehensive books on mergers and acquisitions. The text combines theories, valuation models, and real-life cases to give business students an overall insight into the Ma deal process. The up-to-date real-life examples and cases provide opportunities for readers to explore and to apply theories to a wide variety of scenarios such as cross-border transactions, highly-levered deals, firms in financial distress, and family-own businesses. The chapter on restructuring under bankruptcy and liquidation both inside and outside the protection of bankruptcy court is timely and most useful in light of today’s economic crisis. Overall, this is an excellent book on mergers, acquisitions, and corporate restructuring activities.”
--Tao-Hsien Dolly King, Rush S. Dickson Professor of Finance, Associate Professor, Department of Finance, The Belk College of Business, University of North Carolina at Charlotte

“Mergers, Acquisitions, and Other Restructuring Activities is an interesting and comprehensive look at the most important aspects of Ma and corporate restructuring --- from strategic and regulatory considerations and Ma deal process, through several chapters on Ma valuation and deal structuring, to other types of restructuring activities. It not only provides a road map for the Ma and other corporate restructuring transactions, but also highlights the key things to watch for. The book is clearly written with extensive but easy-to-follow case examples and empirical findings and cases to illustrate the points in the text. It is a book by an expert, and for Ma instructors and students as well as practitioners.”
--Qiao Lui, Faculty of Business and Economics, The University of Hong Kong

“I am delighted with Don DePamphilis's new edition of the Merger, Acquisitions, and Other Restructuring Activities Fifth Edition text. It is a clear, comprehensive and thorough discussion of the issues involving all restructuring activities. The use of mini-cases throughout each chapter both highlights and clarifies key elements of aspects of decision making process. The end-of-chapter discussion questions are ideally complimented with the problem set questions to challenge the reader understanding of the covered concepts. I am impressed with the current reflection of market conditions throughout the text and the extent of the recent changes to provide greater understanding for students. I expect to find that the students are also impressed with the clarity and structure of the text when I introduce the newest edition to my course. I recommend the fifth edition to any professor covering mergers, acquisitions, bankruptcies, or other restructuring topics which may be used for specific chapters to cover limited topics, or as a text for a complete course on restructurings.”
--John F. Manley, Ph.D, Professor of Finance, Hagan School of Business, Iona College, NY

“Mergers and Acquisitions continue to be amongst the preferred competitive options available to the companies seeking to grow and prosper in the rapidly changing global business scenario.
In this new updated and revised Fifth Edition of his path breaking book - the author and Ma expert Dr. DePamphilis illustrates how mergers, acquisitions, and other major forms of restructuring can help a company grow and prosper in the highly complex and competitive corporate takeover market place.

Interspersed with most relevant and up-to-date Ma case studies covering a broad range of industries, this book deals with the multifarious aspects of corporate restructuring in an integrated manner adopting a lucid style. While academic research studies on the subject have been incorporated in a coherent manner at appropriate places in the book, every effort has been made by the author to deal with the intricacies of the subject by offering comprehensive coverage of the latest methods and techniques adopted in managing Ma transactions in general and in dealing with business valuations of both public and private companies in particular.

The book provides practical ways of dealing with Mas even in an economic downturn with an exclusive chapter on corporate restructuring under bankruptcy and liquidation. With the greatly enlarged and up-to-date material on varied aspects of the subject, the book provides a plethora of real world examples which will go a long way in making the subject easy, stimulating, and interesting to both the academicians and practioners alike.”
--Donepudi Prasad, ICFAI Business School, Hyderabad, India

“Professor DePamphilis has made significant, important and very timely updates in this 5th edition of his text. He incorporates contemporary events such as the credit crunch and the latest accounting rules in the West plus Ma issues in emerging markets which includes family businesses. He also readdresses corporate governance, a topic that will become increasingly important in Business Schools the world over in Ma This text has become, and will increasingly become, the definitive comprehensive and thorough text reference on the subject.”
-- Jeffrey V Ramsbottom PhD, Visiting Professor China Europe International Business School, Shanghai

“I think the fifth edition of Mergers, Acquisitions, and Other Restructuring Activities does a comprehensive job of covering the Ma field. As in the previous edition, the structure is divided into five parts. These are logical and easy to follow, with a nice blend of theory, empirical research findings, and practical issues. I especially like two chapters – the chapter on bankruptcy and liquidation is extremely relevant in today’s economic conditions, and the chapter on private equity and hedge funds is interesting because Ma activities by these players are not well-documented in the literature. Overall, I believe that MBA students would find the book useful both as a textbook in class and as a reference book for later use.”
--Raghavendra Rau, Purdue University, IN, and Barclays Global Investors

“This book is truly outstanding among the textbooks on takeovers, valuation and corporate restructuring for several reasons: the DePamphilis book not only gives a very up-to-date overview of the recent research findings on takeovers around the world, but also offers nearly 100 recent business cases. The book treats all the valuation techniques in depth and also offers much institutional detail on Ma and LBO transactions. Not just takeover successes are analyzed, but also how financially distressed companies should be restructured. In short, the ideal textbook for any Ma graduate course.”
-- Luc Renneboog, Professor of Corporate Finance, Tilburg University, The Netherlands

“The 5th Edition of the text-book Mergers, Acquisitions, and Other Restructuring Activities by Professor Donald DePamphilis is an excellent book. Among its many strengths, I could easily identify three features that stand out. First, it is up-to-date, covering the recent knowledge published in most of the academic journals. Second, it offers a comprehensive coverage of the subject matter, including chapters on the U.S. institutional, legal, and accounting environment; on technical aspects; valuation techniques; and strategic issues. Third, it is practical by including Excel Spread Sheet Models, and a large number of real cases. These three aspects along with the large number of end-of-chapter discussion and review questions, problems, and exercises make this book one of the best choices for the particular subject.”
--Nickolaos G. Travlos, The Kitty Kyriacopoulos Chair in Finance, and Dean,
ALBA Graduate Business School, Greece

“It is difficult to imagine that his 4th edition could be improved upon, but Dr. DePamphilis has done just that. His latest edition is clearer, better organized, and contains a wealth of vitally important new material for these challenging times. I especially recommend the new chapter on liquidation for members of boards of directors who face extreme circumstances. This is a remarkably useful book for readers at any level--students, instructors, company executives, as well as board members. Bravo Don!”
--Wesley B. Truitt, Adjunct Professor, School of Public Policy, Pepperdine University, CA

“An impressive detailed overview of all aspects of Mergers and Acquisitions. Numerous recent case studies and examples convince the reader that all the material is very relevant in today’s business environment.”
--Theo Vermaelen, Professor of Finance, Insead