The AMA Handbook of Due Diligence

Overview

Revised & Updated Edition of the Most Complete Due Diligence Guide Ever Published!

If you are...acquiring, merging, selling, appraising, auditing, or underwriting a business entity or business unit, don’t proceed without The AMA Handbook of Due Diligence.

What makes The AMA Handbook of Due Diligence so special? It’s really an annotated collection of almost 400 forms – easy to use and customize from the companion CD-ROM – that allow you to ...

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Overview

Revised & Updated Edition of the Most Complete Due Diligence Guide Ever Published!

If you are...acquiring, merging, selling, appraising, auditing, or underwriting a business entity or business unit, don’t proceed without The AMA Handbook of Due Diligence.

What makes The AMA Handbook of Due Diligence so special? It’s really an annotated collection of almost 400 forms – easy to use and customize from the companion CD-ROM – that allow you to record and analyze every possible operational and financial activity of the business units under investigation. Probing sequences of questions penetrate into the darkest corners…long lists of possible reasons lead you to research the background of every “fact”. All the danger signs Crilly and Sherman have learned to recognize are uncompromisingly confronted. The forms elicit such realities as:

• Projections unrealistic because of factors not taken into account

• Disputes between directors and controlling shareholders

• Management not providing directors with accurate information

• Potential losing contracts

• Changes in competitive environment

• Global economic factors

…just to mention a few of the thousands of real-life possibilities you can pinpoint with the help of this amazingly complete investigative guide.

Why do so many new ventures, mergers and acquisitions fail? Not because the due diligence investigation doesn’t yield good answers. Rather because some important questions are never asked. Here at last is an easy-to-use system so detailed and far-seeing that no potential development is overlooked. It includes:

• Almost 400 ready-to-use forms

• Step-by-step practical guidance

• Advice on evaluating information and danger signs

• A CD-ROM with all the forms you need to perform complete due diligence

All this adds up to create a logical, sequenced methodology that hunts down the full and accurate truth. With probing, uncompromising insistence, The AMA Handbook of Due Diligence gives you the means to diligently pursue each detail to satisfactory closure. It gives you the power to ensure the fusion of a profitable new entity or the successful absorption of one entity by another.

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Editorial Reviews

From the Publisher

“[T]his book can be useful for professional services practitioners looking for a refresher on various parts of the traditional M&A process, for professional services practitioners who want to build their own customized traditional forms and checklists, or for professionals or researchers looking for one of the very few books on traditional due diligence.” --Due Diligence Digest (International Due Diligence Association)

“… takes away a lot of that angst…help everyone from the due diligence novice to the expert… proven track record of AMA assures…it will be a good product.”— CarpeFactum

“… treacherous course of due diligence…fraught with booby traps…having a road map on which to execute your due diligence can help …authors provide a great road map.” —Law Insider

“…I have been involved in a number of transactions…this book…takes a very complicated and involved process and explains it in a way that is thorough, clear, and… concise.” – CEO Blog

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Product Details

  • ISBN-13: 9780814413821
  • Publisher: AMACOM
  • Publication date: 6/25/2010
  • Edition description: Revised and Updated Edition
  • Edition number: 2
  • Pages: 848
  • Product dimensions: 8.50 (w) x 11.10 (h) x 2.30 (d)

Meet the Author

William M. CRILLY was the chairman and founder of Newport Pacific Associates, a firm that assisted companies in arranging mergers and acquisitions. Throughout his business career Mr. Crilly led numerous acquisitions, divestitures, and public and private financing activities, all of which required rigorous due diligence investigations. As a top management official of several public companies, he was responsible for formulating final recommendations to the companies’ boards of directors. Mr. Crilly served in executive positions at Eastern Airlines, Pan American World Airways, Riegel Paper, & Bowmar Instrument Corp.

Andrew J. SHERMAN is a partner in the Washington, D.C. office of Jones Day, a global law firm. Mr. Sherman is a corporate and transactional attorney and is a recognized international authority on the legal and strategic aspects of business growth, with a focus on mergers and acquisitions, joint ventures, strategic alliances, capital formation, franchising, and other types of intellectual property leveraging and growth strategies. Mr. Sherman is also the author of eighteen books, including Franchising & Licensing: Two Ways to Build Your Business (AMACOM, 2003), Raising Capital (AMACOM, 2005) and Mergers and Acquisitions from A to Z (AMACOM, 2006).

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Read an Excerpt

What’s New In This Edition

In wake of the Sarbanes-Oxley Act enacted pursuant to the Enron scandal and subsequent events as well as the changed Mergers and Acquisitions scenario due to the credit crisis, a significant change has been witnessed in the practice of due diligence. This has necessitated addition of content in the introductory sections of the Handbook, including common due diligence problems, common mistakes made by the buyer and the art and science of due diligence that prominently reflect the practice of due diligence in current times.

Due diligence practice post Sarbanes-Oxley enactment deserves the addition of a separate section in view of some onerous disclosure requirements that are now mandatory. An additional section has been inserted providing checklists for potential acquisitions or investment in selected industries and/or businesses. Such checklists are provided with a view to educate audiences of special considerations in each of the businesses contained in that section to facilitate a unique due diligence process for each such business. Examples of such businesses include restaurant services, franchising companies, hospitals, outsourcing technical services, private equity and hedge funds and closely held businesses. With each such business, we seek to cater to a broad audience of the new series of the Handbook to give useful insights on warning signals before investing or acquiring such specific businesses.

The section on Non-M&A transactions has been added with an aim to make the new series of the Handbook comprehensive. Adequate and timely due diligence is required not just for transactions that pertain to acquisition or investment, but to joint ventures, strategic alliances, licensing technology and entering into dealership or distributorship agreements. Continuing on our intention to cater to a broad audience, the editors of the Handbook seek to leverage on their practical and legal experience in such individualized transactions and provide effective checklists to ensure that potential participants of such transactions are in safe harbor before signing on dotted lines of formal instruments.

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Table of Contents

Contents

List of Forms v

1. Preface 1

2. How To Use The Due Diligence Handbook 15

3. Overview Of Entity 21

4. Compatibility With Investment / Acquisition Objectives 29

5. Capitalization And Ownership 49

6. Organization And Management 67

7. Relationships With Outside Organizations 89

8. Description Of Products And/Or Services 105

9. Revenues And Market Share 151

10. Marketing Operations 195

11. Customer Service 261

12. Inventory Control And Purchasing 277

13. Production 311

14. Physical Distribution 363

15. Computer, Communications And Information Systems 389

16. Financial Management 419

17. Legal Affairs 469

18. Security And Safety 495

19. Human Resources 505

20. Land And Buildings 541

21. Introduction To Financial Analyses 559

22. Balance Sheet Analysis - Liabilities 565

23. Revenues 587

24. Operating Expenses 593

25. Income Taxes 613

26. Net Income 621

27. Capital Expenditures 627

28. Cash Flow 633

29. Financial Ratio Analysis 639

30. Income Statement Projections 657

31. Balance Sheet Projections 679

32. Cash Flow Projections 699

33. Due Diligence Checklists 707

34. Transaction - Specific Due Diligence Checklists For Acquisitions Or Investments On

Specific Dealings In Selected Industries 727

35. Sample Forms Related To Effective Due Diligence 737

36. Due Diligence Checklists For Special Situations 769

Appendix A: Bibliography And Recommended Further Reading 791

Appendix B: A Selection Of Blank Forms 793

Index 799

About the Authors 827

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