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

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

• ISBN13: 9780071403023
• ISBN10: 0071403027
• Edition: 4th
• Format: Hardcover
• Copyright: 2007-05-17
• Publisher: McGraw-Hill Education

Summary

Long-established as the "M&A bible," The Art of M&A has equipped thousands of practitioners with a definitive source of knowledge and step-by-step guidance on every facet of mergers and acquisitions. With thoroughly new, totally up-to-date material, the fourth edition of The Art of M&A offers a comprehensive account of all the changes that have taken place in the field since the merger wave of the 1990s, presenting crucial information, guidelines, and strategies that can make or break a deal.

Author Biography

Stanley Foster Reed has consulted on numerousglobal deals, including Allied Chemical, Gillette, and Seiko Watch.

Alexandra Reed Lajoux is president of Alexis andCompany and the coauthor of several M&A books.

H. Peter Nesvold,C.F.A.,C.P.A is managingdirector of Columbus Capital Company. He has advised on M&A transactionsfor top companies such as America Online and Time Warner.

Table of Contents

Preface	p. vii
Getting Started in Mergers and Acquisitions	p. 1
Introduction
Basic Terms
Concluding Comments
Notes
Planning and Finding	p. 9
Introduction
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
Hart-Scott-Rodino
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
Notes
Valuation and Pricing	p. 77
Introduction
Valuation Fundamentals
Pricing Issues
Special Considerations for Private Companies
Expressing the Purchase Price in the Acquisition Agreement
Concluding Comments
Estimating the Cost of Capital
Notes
The Art of Financing and Refinancing	p. 141
Introduction
Financing Overview
Financing Instruments: Equity vs. Debt vs. Hybrids
Financing Sources
Highly Leveraged Transactions
Minimizing Borrowing
Determining Structure in Debt Financing
Senior Debt
Sale-Leasebacks
Pros and Cons of Preserving Debt and Lease Obligations
Seller Takeback Financing
Warrants
Working Capital Debt of the Seller
The Bank Book and Commitment Letter
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
Notes
Structuring Transactions: General, Tax, and Accounting Considerations	p. 261
Introduction
General Considerations
Accounting Considerations
Goodwill Impairment Testing
Tax Considerations
Concluding Comments
Transaction Diagrams
Notes
The Due Diligence Inquiry	p. 381
Introduction
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
Notes
Negotiating the Acquisition Agreement and the Letter of Intent	p. 459
Introduction
The Letter of Intent
The Acquisition Agreement
Components of the Agreement
Introductory Material
Representations and Warranties
Covenants
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
Notes
Closing	p. 613
Introduction
The Basics of Closing
Pre-Closing
Closing
Wire Transfers
Post-Closing
Planning the Closing
Concluding Comments
Sample Closing Memorandum (Including a Detailed Schedule of Closing Documents)
Note
Postmerger Integration and Divestitures	p. 645
Introduction
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
Divestitures
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
Notes
Special Issues for M&A in Public Companies	p. 785
Introduction
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
Notes
Workouts, Bankruptcies, and Liquidations	p. 861
Introduction
General Considerations
Workouts
Bankruptcy
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
Liquidation
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
Notes
Structuring Transactions with International Aspects	p. 905
Introduction
Nontax Issues Regarding Foreign Investment in the United States
Acquisitions of Entities Involving Assets Located Outside the United States
Foreign Exchange
Financing
International Tax and Disclosure Considerations
Tax Considerations in Inbound Acquisitions
FIRPTA
Tax Considerations in Outbound Acquisitions
Concluding Comments
Notes
A WOFC Case Study: J. T. Smith Consultants	p. 965
Landmark and Recent M&A Legal Cases	p. 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	p. 1049
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