Mergers, Acquisitions, and Corporate Restructurings, 4th Edition

The essential reference revised and updated

The 1st edition of this book won of the Book of the Year Award in Accounting from the Association of American Publishers

Supplemented with numerous updated, international case studies, this new Fourth Edition helps novice and savvy business managers fully comprehend the issues, methods, motives, and techniques that shape today’s world of mergers, acquisitions, divestitures, and reorganizations. Providing a historical and practical perspective, it covers every aspect of a deal-from which kind of corporate restructuring is right for a corporation and the laws governing them to the financial analysis used by acquiring and target companies prior to signing the deal.

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TABLE OF CONTENTS:

Preface

About the Web Site

Part 1 Background

1 Introduction

  • Recent M&A Trends.
  • Definitions.
  • Valuing a Transaction.
  • Types of Mergers.
  • Reasons for Mergers and Acquisitions.
  • Merger Financing.
  • Merger Professionals.
  • Merger Arbitrage.
  • Leveraged Buyouts and the Private Equity Market.
  • Corporate Restructuring.
  • Merger Negotiations.
  • Merger Approval Procedures.
  • Short-Form Merger.
  • Freezeouts and the Treatment of Minority Shareholders.
  • Purchase of Assets Compared with Purchase of Stock.
  • Structuring the Deal.
  • Assumption of the Seller’s Liabilities.
  • Advantages of Asset Acquisitions.
  • Asset Selloffs.
  • Reverse Mergers.
  • Holding Companies.

2 History of Mergers

  • Merger Waves.
  • What Causes Merger Waves?
  • First Wave, 1897–1904.
  • Second Wave, 1916–1929.
  • The 1940s.
  • Third Wave, 1965–1969.
  • Trendsetting Mergers of the 1970s.
  • Fourth Wave, 1984–1989.
  • Fifth Wave.
  • Summary.

3 Legal Framework

  • Laws Governing Mergers, Acquisitions, and Tender Offers.
  • Securities Laws.
  • Other Specific Takeover Rules in the United States.
  • International Securities Laws Relating to Takeovers.
  • Business Judgment Rule.
  • State Antitakeover Laws.
  • Regulation of Insider Trading.
  • Antitrust Laws.
  • Recent Trends in Antitrust Enforcement in the United States.
  • Measuring Concentration and Defining Market Share.
  • European Competition Policy.
  • Antitrust Remedies.
  • Summary.

4 Merger Strategy

  • Growth.
  • Synergy.
  • Operating Synergy.
  • Diversification.
  • Other Economic Motives.
  • Hubris Hypothesis of Takeovers.
  • Other Motives.
  • Tax Motives.
  • Summary.

Part 2 Hostile Takeovers

5 Antitakeover Measures

  • Management Entrenchment Hypothesis versus Stockholder Interests Hypothesis.
  • Preventative Antitakeover Measures.
  • Changing the State of Incorporation.
  • Active Antitakeover Defenses.
  • Information Content of Takeover Resistance.
  • Summary

6 Takeover Tactics

  • Preliminary Takeover Steps.
  • Tender Offers.
  • Open Market Purchases and Street Sweeps.
  • Advantages of Tender Offers over Open Market Purchases.
  • Arbitrage and the Downward Price Pressures Around M&A Announcements.
  • Proxy Fights.
  • Summary.

Part 3 Going Private Transactions and Leveraged Buyouts

7 Leveraged Buyouts

  • Terminology.
  • Historical Trends in LBOs.
  • Costs of Being a Public Company.
  • Management Buyouts.
  • Conflicts of Interest in Management Buyouts.
  • Financing for Leveraged Buyouts.
  • Capital Structure of LBOs.
  • Sources of LBO Financing.
  • Returns to Stockholders from LBOs.
  • Returns to Stockholders from Divisional Buyouts.
  • Reverse LBOs.
  • Empirical Research on Wealth Transfer Effects.
  • Protection for Creditors.
  • Summary.

8 Trends in the Financing of Takeovers and Going Private Transactions

  • Trends in Cash versus Stock Percentage of Takeover Financing.
  • Shareholder Wealth Effects and Methods of Payment.
  • Private Equity Market.
  • Hedge Funds.
  • Comparison of Private Equity Funds and Hedge Funds.
  • Hedge Fund and Private Equity Fund Convergence.
  • Junk Bonds Financing of Takeovers.
  • Stapled Financing.
  • Securitization and M&A Financing.
  • Summary.

9 Employee Stock Ownership Plans

  • Historical Growth of ESOPs.
  • Types of Plans.
  • Characteristics of ESOPs.
  • Leveraged versus Unleveraged ESOPs.
  • Corporate Finance Uses of ESOPs.
  • Voting of ESOP Shares.
  • Cash Flow Implications.
  • Valuation of Stock Contributed into an ESOP.
  • Eligibility of ESOPs.
  • Put Options of ESOPs.
  • Dividends Paid.
  • ESOPs versus a Public Offering of Stock.
  • Employee Risk and ESOPs.
  • Securities Laws and ESOPs.
  • Tax Benefits of LESOPs.
  • Balance Sheet Effects of ESOPs.
  • Drawbacks of LESOPs.
  • ESOPs and Corporate Performance.
  • ESOPs as an Antitakeover Defense.
  • ESOPs and Shareholder Wealth.
  • ESOPs and LBOs.
  • Summary.

Part 4 Corporate Restructuring

10 Corporate Restructuring

  • Divestitures.
  • Divestiture and Spinoff Process.
  • Wealth Effects of Selloffs.
  • Equity Carve-outs.
  • Voluntary Liquidations, or Bustups.
  • Tracking Stocks.
  • Master Limited Partnerships and Selloffs.
  • Summary.

11 Restructuring in Bankruptcy

  • Types of Business Failure.
  • Causes of Business Failure.
  • Bankruptcy Trends.
  • U.S. Bankruptcy Laws.
  • Reorganization versus Liquidation.
  • Reorganization Process.
  • Benefits of the Chapter 11 Process for the Debtor.
  • Company Size and Chapter 11 Benefits.
  • Prepackaged Bankruptcy.
  • Workouts.
  • Corporate Control and Default.
  • Liquidation.
  • Investing in the Securities of Distressed Companies.
  • Summary.

12 Corporate Governance

  • Failed Corporate Governance: Accounting Scandals.
  • Sarbanes-Oxley Act.
  • Other Regulatory Changes.
  • Corporate Governance.
  • Summary.

13 Joint Ventures and Strategic Alliances

  • Contractual Agreements.
  • Comparing Strategic Alliances and Joint Ventures with Mergers and Acquisitions.
  • Joint Ventures.
  • Governance of Strategic Alliances.
  • Summary.

14 Valuation

  • Valuation Methods: Science or Art?
  • Managing Value as an Antitakeover Defense.
  • Benchmarks of Value.
  • How the Market Determines Discount Rates.
  • Valuation of the Target’s Equity.
  • Takeovers and Control Premiums.
  • Marketability of the Stock.
  • Valuation of Stock-for-Stock Exchanges.
  • Exchange Ratio.
  • Fixed Number of Shares versus Fixed Value.
  • International Takeovers and Stock-for-Stock Transactions.
  • Desirable Financial Characteristics of Targets.
  • Summary.
  • Appendix.

15 Tax Issues

  • Financial Accounting.
  • Taxable versus Tax-Free Transactions.
  • Tax Consequences of a Stock-for-Stock Exchange.
  • Asset Basis Step-Up.
  • Changes in the Tax Laws.
  • Role of Taxes in the Merger Decision.
  • Taxes as a Source of Value in Management Buyouts.
  • Miscellaneous Tax Issues.

Summary

Glossary

Index