Mergers, Acquisitions, and Other Restructuring Activities

Mergers, Acquisitions, and Other Restructuring Activities

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

7th Edition - October 1, 2013

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  • Author: Donald DePamphilis
  • eBook ISBN: 9780123854889

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Description

In the seventh edition of Mergers, Acquisitions, and Other Restructuring Activities – winner of a 2014 Textbook Excellence Award (Texty) from the Text and Academic Authors Association – Donald DePamphilis looks into the heart of current economic trends. In addition to a new chapter on the ways deals are financed, more than 85% of the 54 integrative case studies are new and involve transactions announced or completed since 2010. This new edition anchors its insights and conclusions in the most recent academic research, with references to more than 170 empirical studies published in leading peer-reviewed journals since 2010. Practical exhibits, case studies involving diverse transactions, easy-to-understand numerical examples, and hundreds of discussion questions and practical exercises are included. This substantially updated content, supplemented by questions from CFA Institute examinations, offers the only comprehensive exploration of today's business transactions. Mergers, acquisitions, and restructuring transactions reveal the inner workings of our economy. This longstanding, award-winning treatment lays out what every student and professional should understand about their parts, what they are intended to accomplish, and what their competitive, strategic, and value consequences are.

Key Features

  • Winner of a 2014 Texty Award from the Text and Academic Authors Association
  • Includes up-to-date and notable transactions (Facebook's takeover of Instagram and Linkedin's IPO) and regulations (Dodd-Frank Act of 2010 and JOBS Act of 2012)
  • Covers recent trends (emerging country acquirers in global M&As) and tactics ("top-up" options and "cash-rich" split-offs)
  • Additional content available online

Readership

Advanced undergraduate, graduate, and MBA students worldwide taking courses in mergers & acquisitions, corporate restructuring, valuation, and corporate strategy.

Table of Contents

  • Dedication

    Contents of the Companion Website

    Preface to the Seventh Edition

    To the Reader

    To the Instructor

    Online Instructor’s Manual

    Student Study Guide

    Many Practical, Timely, and Diverse Examples and Current Business Cases

    Comprehensive Yet Flexible Organization

    Acknowledgments

    About the Author

    Part I: The Mergers and Acquisitions Environment

    Chapter 1. An Introduction to Mergers, Acquisitions, and Other Restructuring Activities

    Inside M&A: Brand Management—V.F. Corp. Buys Timberland

    Chapter Overview

    Why Mergers and Acquisitions Happen

    Historical Developments in Mergers and Acquisitions

    Understanding Corporate Restructuring Activities

    Alternative Takeover Strategies

    The Role of Holding Companies in Mergers and Acquisitions

    The Role of Employee Stock Ownership Plans (ESOPs) in Mergers and Acquisitions

    Business Alliances as Alternatives to Mergers and Acquisitions

    Participants in the Mergers and Acquisitions Process

    The Implications of Mergers and Acquisitions for Shareholders, Bondholders, and Society

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Chapter 2. The Regulatory Environment

    Inside M&A: AT&T/T-Mobile Deal Short-circuited by Regulators

    Chapter Overview

    Understanding Federal Securities Laws

    Understanding Antitrust Legislation

    The Implications for M&A of the Dodd-Frank Wall Street Reform and Consumer Protection Act

    State Regulations Affecting Mergers and Acquisitions

    Restrictions on Direct Foreign Investment in the United States

    The U.S. Foreign Corrupt Practices Act

    Fair Disclosure (Regulation FD)

    Specific Industry Regulations

    Environmental Laws

    Labor and Benefit Laws

    Cross-Border Transactions

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

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

    Inside M&A: Linkedin IPO Raises Governance Issues

    Chapter Overview

    Corporate Governance

    Understanding Altenative Takeover Tactics

    What Makes the Aggressive Approach Successful?

    Other Tactical Considerations

    Developing a Bidding Strategy

    Understanding Alternative Takeover Defenses

    The Impact of Takeover Defenses on Shareholder Value

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    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: From a Social Media Darling to an Afterthought—The Demise of Myspace

    Chapter Overivew

    The Role of Planning in Mergers and Acquisitions

    The Merger and Acquisition Process

    Phase 1: Building the Business Plan

    The Business Plan as a Communication Document

    Phase 2: Building the Merger-Acquisition Implementation Plan

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Chapter 5. Implementation: Search Through Closing: Phases 3 through 10 of the Acquisition Process

    Inside M&A: Sony’s Strategic Missteps

    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

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Chapter 6. Postclosing Integration: Mergers, Acquisitions, and Business Alliances

    Inside M&A: The Challenges of Integrating United and Continental Airlines

    Chapter Overview

    The Role of Integration in Successful Mergers and Acquisitions

    Integration is A Process, not an Event

    Integrating Business Alliances

    Some Things to Remember

    Discussion Questions

    Part III: Mergers and Acquisitions Valuation and Modeling

    Chapter 7. Mergers and Acquisitions Cash Flow Valuation Basics

    Inside M&A: Valuation Methodologies and Fairness Opinion Letters

    Chapter Overview

    Estimating Required Financial Returns

    Risk Assessment

    Calculating Free Cash Flows

    Applying Discounted Cash Flow Methods

    Using the Enterprise Method to Estimate Equity Value

    Valuing Nonoperating Assets

    Putting It All Together

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Practice Prolems and Answers

    Chapter 8. Relative, Asset-Oriented, and Real-Option Valuation Basics

    Inside M&A: Bristol-Myers Squibb Places a Big Bet on Inhibitex

    Chapter Overview

    Relative-Valuation Methods

    Asset-Oriented Methods

    The Weighted-Average Valuation Method

    Adjusting Valuation Estimates for Purchase Price Premiums

    Real-Options Analysis

    Determining when to Use the Different Approaches to Valuation

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Practice Problems and Answers

    Chapter 9. Applying Financial Models: 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

    The Model-Building Process

    Assessing Impact of M&A’s on Postacquisition Earnings Per Share

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Practice Problems and Answers

    Chapter 10. Analysis and Valuation of Privately Held Firms

    Inside M&A: Taking Advantage of a “Cupcake Bubble”

    Chapter Overview

    What are Privately Held Companies?

    Governance Issues

    Challenges of Valuing Privately Held Companies

    Process for Valuing privately Held Businesses

    Step 1: Adjusting Financial Statements

    Step 2: Applying Valuation Methodologies to Privately Held Companies

    Step 3: Developing Discount Rates

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

    Reverse Mergers

    Using Leveraged Employee Stock Ownership Plans (ESOPS) to Buy Private Companies

    Empirical Studies of Shareholder Returns

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Practice Problems and Answers

    Part IV: Deal-Structuring and Financing Strategies

    Chapter 11. Structuring the Deal: Payment and Legal Considerations

    Inside M&A: Illustrating How Deal Structure Affects Value—The Facebook/Instagram Deal

    Chapter Overview

    The Deal-Structuring Process

    Form of Acquisition Vehicle and Postclosing Organization

    Legal Form of the Selling Entity

    Form of Payment

    Managing Risk and Reaching Consensus on Purchase Price

    Constructing Collar Arrangements

    Form of Acquisition

    Some Things to Remember

    Discussion Questions

    Chapter 12. Structuring the Deal: Tax and Accounting Considerations

    Inside M&A: Johnson & Johnson Uses Financial Engineering to Acquire Synthes Corporation

    Chapter Overview

    Alternative Tax Structures

    Taxable Transactions

    Tax-Free Transactions

    Other Tax Considerations Affecting Corporate Restructuring

    Financial Reporting of Business Combinations

    Impact of Purchase Accounting on Business Combinations

    Recapitalization (“Recap”) Accounting

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Practice Problems and Answers

    Chapter 13. Financing the Deal: Private Equity, Hedge Funds, and Other Sources of Financing

    Inside M&A: Lessons from Pep Boys’ Aborted Attempt to Go Private

    Chapter Overview

    How are M&A Transactions Commonly Financed?

    What is the Role of Private Equity, Hedge, and Venture Capital Funds in Deal Financing?

    Leveraged Buyouts as Financing Strategies

    What Factors are Critical to Successful LBOs?

    How do LBOs Create Value?

    Common LBO Deal and Capital Structures

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Chapter 14. Highly Leveraged Transactions: LBO Valuation and Modeling Basics

    Inside M&A: Kinder Morgan’s Takeover of El Paso Raises Ethical Questions

    Chapter Overview

    How are LBOs Valued?

    LBO Valuation and Structuring Model Basics

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Practice Problems

    Part V: Alternative Business and Restructuring Strategies

    Chapter 15. Business Alliances: Joint Ventures, Partnerships, Strategic Alliances, and Licensing

    Inside M&A: Exxon-Mobil and Russia’s Rosneft Create ArCtic Oil and Gas Exploration Joint Venture

    Chapter Overview

    Motivations for Business Alliances

    What Makes Business Alliances Successful?

    Alternative Legal Forms of Business Alliances

    Strategic and Operational Plans

    Resolving Business Alliance Deal-Structuring Issues

    Empirical Findings

    Some Things to Remember

    Discussion Questions

    Chapter 16. Alternative Exit and Restructuring Strategies: Divestitures, Spin-Offs, Carve-Outs, Split-Offs, and Tracking Stocks

    Inside M&A: The Warner Music Group is Sold at Auction

    Chapter Overview

    Why do Firms Exit Businesses?

    Divestitures

    Spin-Offs

    Equity Carve-Outs

    Split-Offs and Split-Ups

    Tracking Stocks, Target Stocks, 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

    Some Things to Remember

    Discussion Questions

    Chapter 17. Alternative Exit and Restructuring Strategies: Bankruptcy Reorganization and Liquidation

    Inside M&A: Photography Icon Kodak Declares Bankruptcy, a Victim of Creative Destruction

    Chapter Overview

    Business Failure

    Voluntary Settlements Outside of Bankruptcy

    Reorganization and Liquidation in Bankruptcy

    Alternative Options for Failing Firms

    Failing Firms and Systemic Risk

    Predicting Corporate Default and Bankruptcy

    Valuing Distressed Businesses

    Empirical Studies of Financial Distress

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    Chapter 18. Cross-Border Mergers and Acquisitions: Analysis and Valuation

    Inside M&A: Sabmiller Acquires Australia’s Foster’s Beer

    Chapter Overview

    Globally Integrated Markets Versus Segmented Capital Markets

    Motives for International Expansion

    Common International Market Entry Strategies

    Structuring Cross-Border Deals

    Financing Cross-Border Deals

    Planning and Implementing Cross-Border Transactions in Emerging Countries

    How are Cross-Border Transactions Valued?

    Empirical Studies of Cross-Border Transactions

    Some Things to Remember

    Discussion Questions

    Questions from the CFA Curriculum

    References

    Glossary

    Index

Product details

  • No. of pages: 768
  • Language: English
  • Copyright: © Academic Press 2013
  • Published: October 1, 2013
  • Imprint: Academic Press
  • eBook ISBN: 9780123854889

About the Author

Donald DePamphilis

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 Emeritus 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

Professor Emeritus of Computer Information Systems & Finance ,Department of Computer Information Systems & Finance , Loyola Marymount University ,Los Angeles, CA, USA

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