Mergers and Acquisitions: Business Strategies for Accountants, Second Edition

by Joseph Morris (Contributing Author, Charles A. Hawes)

• ISBN13: 9780471381877
• ISBN10: 047138187X
• Edition: 2nd
• Format: Hardcover
• Copyright: 2000-05-01
• Publisher: Wiley

Summary

The exploding level of activity in mergers and acquisitions in recent years has placed increased demands on the accountants involved. This book shows accountants how to achieve competence in the various accounting and business aspects of mergers and acquisitions.

Table of Contents

Preface	xvii
Acknowledgments	xix
Acquisitions---A Business and Legal Overview	1	(74)
James R. Krendl
Krendl
Horowitz
Krendl
Introduction	3	(1)
Why Companies Buy or Merge	3	(2)
The Acquisition Process	5	(1)
The Acquisition Team	6	(3)
Overall Acquisition Strategy and Criteria	9	(1)
Identifying an Acquisition Candidate	10	(2)
Evaluating an Acquisition Candidate	12	(1)
Structuring Acquisitions	13	(4)
Establishing Price	17	(2)
Financing Acquisitions	19	(9)
Tax Issues	28	(2)
Formalizing the Deal and Due Diligence	30	(2)
Consummating the Acquisition	32	(4)
Postacquisition Matters	36	(1)
Limited-Liability Entities	37	(5)
Characteristics and Qualifications Concerning Limited Liability	42	(6)
Purchase Price in the Form of Stock	48	(6)
Some Thoughts on Negotiation	54	(6)
Role of Business Brokers	60	(15)
Checklist for Purchase of Corporate Assets and Assumption of Liabilities	65	(10)
Preacquisition Reviews	75	(66)
Daniel T. May
Brian W. Meara
General	76	(2)
Searching for and Screening Acquisition Candidates	78	(4)
Reviewing an Acquisition Candidate's Industry and Business	82	(5)
Analyzing an Acquisition Candidate's Financial Statements	87	(5)
Reviewing Proposed Acquisition Structures, Terms, and Agreements	92	(49)
Coopers & Lybrand Comprehensive Preacquisition Review Checklist	97	(40)
Overview Preacquisition Review Checklist	137	(4)
Postacquisition Transition and Integration	141	(20)
Price Pritchett
General	141	(2)
Key Dynamics Set in Motion by the Merger	143	(2)
The Emotional Impact on People	145	(7)
Guidelines for Managers and Executives in the Acquiring Firm	152	(4)
Guidelines for Managers and Executives in the Acquired Organization	156	(2)
Final Comments	158	(3)
Accounting for Business Combinations: Overview	161	(40)
Joseph M. Morris
General	162	(2)
Pooling-of-Interests Method and the Purchase Method	164	(1)
FASB Business Combinations Project	165	(11)
FASB Consolidation Project	176	(9)
Accounting and Systems Transition	185	(16)
Accounting Standards on Business Combinations	195	(2)
Checklist for Transition and Integration	197	(4)
The Pooling-of-Interests Method	201	(24)
Joseph M. Morris
Conditions for the Use of the Pooling-of-Interests Method	202	(1)
Attributes of the Combining Companies	202	(1)
Manner of Combining Interests	203	(9)
Absence of Planned Transactions	212	(2)
Accounting by the Pooling-of-Interests Method	214	(4)
Financial Reporting of a Pooling of Interests	218	(7)
Purchase Accounting	225	(42)
Joseph M. Morris
General Principles of Purchase Accounting	226	(1)
Determining the Cost of an Acquisition	227	(6)
Recording Assets Acquired and Liabilities Assumed	233	(8)
Purchase Accounting in Special Areas	241	(12)
Income Tax Accounting	253	(4)
Record Keeping for Purchase Accounting Acquisitions	257	(1)
Financial Reporting of a Purchase Acquisition	258	(6)
Illustrations of Purchase Accounting	264	(3)
Checklist of Disclosure Requirements--Purchase-Method Acquisitions	265	(2)
Accounting for Leveraged Acquisitions	267	(21)
James N. Brendel
Introduction	267	(2)
Application of EITF Issue 88-16	269	(5)
SEC Accounting Guidance	274	(3)
Illustration of Accounting for a Leveraged Acquisition	277	(11)
EITF Issue 88-16, Basis in Leveraged Buyout Transactions	279	(8)
EITF Issues on Leveraged Acquisitions	287	(1)
Federal Income Taxation of Acquisitions	288	(29)
Greg A. Dickey
General	288	(2)
Taxable Acquisitions	290	(6)
IRC Section 338	296	(2)
Tax-Free Mergers and Acquisitions	298	(10)
Tax Losses and Tax Credit Carryovers of Acquired Corporations	308	(7)
Miscellaneous Tax Considerations	315	(2)
The Independent Accountant's Role in Acquisitions	317	(36)
James N. Brendel
Introduction	318	(1)
Acquisition Audits	319	(2)
Preacquisition Reviews and Procedures and Related Reporting	321	(14)
Consulting and Business Advisory Services	335	(1)
Auditing Postacquisition Financial Statements of an Acquirer	336	(5)
Planning and Arrangements with Clients	341	(12)
Illustration of a Program for Auditing Purchase-Method Accounting	343	(4)
Illustration of an Engagement Letter for a Preacquisition Review	347	(2)
Illustration of a Program for Preacquisition Review by an Independent CPA	349	(4)
Securities and Exchange Commission and Other Regulatory Requirements	353	(28)
Robert J. Puls
Overview of Regulatory Environment	354	(1)
Securities Law Requirements upon Merger or Acquisition	355	(3)
Solicitation and Preparation of Proxies	358	(1)
Tender Offers	359	(5)
SEC Financial Reporting Requirements	364	(7)
Unique SEC Accounting Requirements	371	(5)
Antitrust Regulations	376	(1)
Other Regulations	377	(4)
Significant SEC Regulatory and Accounting Pronouncements	379	(2)
Valuing an Acquisition Candidate	381	(18)
Louis E. Sapperstein
Rosen
Sapperstein
Friedlander
General	382	(1)
Overriding Strategic Considerations	382	(1)
Similarity of Acquisition Search Criteria and Business Valuation Criteria	383	(3)
Defining the Purchase	386	(1)
The Valuation Model	386	(12)
Synthesizing the Estimate of Value: Final Comments	398	(1)
Appendix A Illustration of Letter of Intent	399	(4)
Appendix B Illustration of Stock Purchase Agreement	403	(16)
Appendix C Illustration of Assets Purchase Agreement	419	(16)
Index	435