The Art of M&A, Fourth Edition: A Merger Acquisition Buyout Guide / Edition 4

The Art of M&A, Fourth Edition: A Merger Acquisition Buyout Guide / Edition 4

by Stanley Foster Reed, Alexandra Reed Lajoux, H. Peter Nesvold

ISBN-10: 0071403027

ISBN-13: 9780071403023

Pub. Date: 04/26/2007

Publisher: McGraw-Hill Professional Publishing

Authoritative and completely up-to-date, the Fourth Edition of The Art of M&A is an unsurpassed, one-stop guide to every facet of mergers and acquisitions that enables you to make winning deals with complete confidence.

This definitive resource retains its popular Q&A format, offering quick access to all the changes that have occurred in the field since

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Authoritative and completely up-to-date, the Fourth Edition of The Art of M&A is an unsurpassed, one-stop guide to every facet of mergers and acquisitions that enables you to make winning deals with complete confidence.

This definitive resource retains its popular Q&A format, offering quick access to all the changes that have occurred in the field since the merger wave of the 1990s. The book explores every key aspect of winning M&A transactions, and presents advice on avoiding common M&A pitfalls.

The Fourth Edition of The Art of M&A features vital information on:

  • Getting Started in Mergers and Acquisitions --learning the basic M&A
    process, requirements, negotiating skills, and objectives
  • Planning and Finding --deciding what to buy and then locating it
  • Valuation and Pricing -- using multiple valuation methods to discover the true value of an acquired company or unit
  • The Art of Financing and Refinancing -- mastering funding sources and issues
  • Structuring M/A/B Transactions -- managing general, tax, and accounting considerations
  • The Due Diligence Inquiry -- looking into the past, present, and future risks of the business to be purchased
  • Negotiating the Acquisition Agreement and the Letter of Intent--
    understanding two vital documents in the M&A process
  • Closing -- synchronizing the many individual items to produce a harmonious transaction
  • Postmerger Integration and Divestitures -- following through after the
    M&A deal to capture the economic value of synergies
  • Special Issues for M&A in Public Companies_examining the unique legal and business considerations of public entities
  • Workouts, Bankruptcies, and Liquidations -- handling specific financial problems that arise in M&A transactions with entities in the zone of insolvency
  • Structuring Transactions with International Aspects -- developing the necessary skills and knowledge to do M&A deals across national borders

Filled with detailed examples and case studies, this updated classic also includes discussion of purchase accounting, Section 404, new legal cases with M&A implications, and more.

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Product Details

McGraw-Hill Professional Publishing
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Table of Contents

Preface     vii
Getting Started in Mergers and Acquisitions     1
Basic Terms
Concluding Comments
Planning and Finding     9
Strategic Planning for Operating Companies
In-House Search
Brokers and Finders
Role of Investment and Commercial Banks in M&A
General Regulatory Considerations for Buyers
Antitrust Considerations for Acquisitions
Concluding Comments
Sample Checklist of Assets for Use in Complement/Supplement Analysis
Sample Checklist of Risks for Use in Seeking Complementary Acquisitions
Premerger Notification and Waiting Period Under Hart-Scott-Rodino
Types of Organizational Structure
Checklist of Assets
Revision to the Horizontal Merger Guidelines Issued by the U.S. Department of Justice and the Federal Trade Commission
Valuation and Pricing     77
Valuation Fundamentals
Pricing Issues
Special Considerations for Private Companies
Expressing the Purchase Price in the Acquisition Agreement
Concluding Comments
Estimating the Cost of Capital
The Art of Financing and Refinancing     141
Financing Overview
Financing Instruments: Equity vs. Debt vs. Hybrids
Financing Sources
Highly Leveraged Transactions
Minimizing Borrowing
Determining Structure in Debt Financing
Senior Debt
Pros and Cons of Preserving Debt and Lease Obligations
Seller Takeback Financing
Working Capital Debt of the Seller
The Bank Book and CommitmentLetter
Other Principal Issues in Senior Loan Agreements
Insurance Company Financing
High-Yield-(a.k.a. "Junk")-Bonds
Bridge Loans
Equity Investment Funds
Registration Rights
Intercreditor Issues
Subordination Issues
Intercreditor Agreements
Fraudulent Conveyance and Other Litigation Concerns
Refinancing Issues
Concluding Comments
Typical Subordination Provisions of Publicly Issued Notes
Typical Subordination Provisions of Privately Placed Institutional Notes
Typical Subordination Provisions of Seller Notes
Structuring Transactions: General, Tax, and Accounting Considerations     261
General Considerations
Accounting Considerations
Goodwill Impairment Testing
Tax Considerations
Concluding Comments
Transaction Diagrams
The Due Diligence Inquiry     381
Getting Started
Duration of Due Diligence
Due Diligence Levels
Relations with Seller
Location of Due Diligence Research
Evaluating Assets
Litigation Analysis
Emerging Legal Issues
Due Diligence After Closing
Concluding Comments
Sample Confidentiality Agreement
Due Diligence Checklist
An Annotated Initial Document and Information Request List
Index of Data Room Documents
Negotiating the Acquisition Agreement and the Letter of Intent     459
The Letter of Intent
The Acquisition Agreement
Components of the Agreement
Introductory Material
Representations and Warranties
Conditions to Closing
Indemnity Section
Acquisitions from an Affiliated Group
Transactions Involving Public Companies
Negotiating and Documenting an MBO
Employment Agreements
Stockholders' Agreements
Concluding Comments
Sample Letter of Intent
Typical Merger Agreement and Commentary
Closing     613
The Basics of Closing
Wire Transfers
Planning the Closing
Concluding Comments
Sample Closing Memorandum (Including a Detailed Schedule of Closing Documents)
Postmerger Integration and Divestitures     645
Basic Concepts of Integration
The Postmerger Plan
Communicating the Integration Plan
Combining Company Names
Integrating Cultures
Integrating Vision, Policy, Ethics, and Mission Statements
Integrating Key Resources, Processes, and Responsibilities
Integrating Resources
Integrating Processes
Integration of Key Responsibilities
Legal Aspects of Shareholder Relations
Commitments to Employees
Postmerger Compensation: A Complex Issue
Planning Pay Integration: A Strategic Overview
Merging Benefit Plans
Concluding Comments
Sample Postmerger Press Release Highlighting Strategic Motivation
Sample Assets Checklist of Resources, Processes, and Responsibilities
Integration Planning Worksheet
Integration Timeline from a Midsized Acquirer
Pairwise Comparison
Special Issues for M&A in Public Companies     785
General Considerations
Sarbanes-Oxley and M&A
Duties of Care, Loyalty, and Good Faith in M&A
Director Responsibilities in Responding to Unsolicited Bids
M&A Forms
Tender Offer Basics
Proxy Solicitations
Merger Disclosure Issues
Insider Trading
Financing the Public Transaction
Takeover Defenses
Related State Laws
Concluding Comments
Workouts, Bankruptcies, and Liquidations     861
General Considerations
State Insolvency Proceedings
Investing Opportunities: Structuring the Purchase of a Troubled Company
Structuring a Leveraged Buyout to Minimize Insolvency Risk
Financing Alternatives for Companies with Losses
Accounting/Tax Issues for Companies with Losses
Concluding Comments
Diagrams Showing Various Structures for Reorganizations and Workouts of Insolvent Companies
The "Samex" Case: Illustrating the Vulnerability of the Bankruptcy Process to Fraud, and the Relative Finality of Acquisition Decisions Made in Bankruptcy Court
Structuring Transactions with International Aspects     905
Nontax Issues Regarding Foreign Investment in the United States
Acquisitions of Entities Involving Assets Located Outside the United States
Foreign Exchange
International Tax and Disclosure Considerations
Tax Considerations in Inbound Acquisitions
Tax Considerations in Outbound Acquisitions
Concluding Comments
A WOFC Case Study: J. T. Smith Consultants     965
Landmark and Recent M&A Legal Cases     1005
Cases Alleging Impropriety in a Merger or in the Acquisition of a Business or Controlling Shares
Cases Alleging Impropriety in the Valuation and/or Sale of a Business, Assets, or Controlling Shares
Cases Involving M&A Agreements or Other Contracts
Cases Alleging Violation of Antitrust Laws
Cases Alleging Violations of Health, Safely, and Labor Laws
Cases Dealing with Jurisdiction or Right to Sue Following a Merger
Additional Recent Cases
Index     1049

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