Mergers, Acquisitions, and Other Restructuring Activities - 7th Edition - ISBN: 9780123854872, 9780123854889

Mergers, Acquisitions, and Other Restructuring Activities

7th Edition

Authors: Donald DePamphilis
eBook ISBN: 9780123854889
Hardcover ISBN: 9780123854872
Imprint: Academic Press
Published Date: 1st October 2013
Page Count: 768
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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

Details

No. of pages:
768
Language:
English
Copyright:
© Academic Press 2014
Published:
Imprint:
Academic Press
eBook ISBN:
9780123854889
Hardcover ISBN:
9780123854872

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

Awards

2014 Textbook Excellence Award – 2nd or Later Edition, Text and Academic Authors Association

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 M&A and restructuring transactions and covers all the relevant knowledge from the academic research to the practical legal, accounting, and regulatory details. The combination of great writing and active case learning make this book the best I have seen in the M&A and restructuring arena.”--Matthew T. Billett, University of Iowa