Mergers, Acquisitions, and Other Restructuring Activities,

Dedication

Preface to the Eighth Edition

• To the Reader
• To the Instructor
• Online Instructor’s Manual
• Student Study Guide
• Many Practical, Timely, and Diverse Examples and Current Business Cases
• Comprehensive Yet Flexible Organization

Acknowledgments

About the Author

Part I: The Mergers and Acquisitions Environment

• Part I. The Mergers and Acquisitions Environment
• Chapter 1. An Introduction to Mergers, Acquisitions, and Other Restructuring Activities
  • Inside Mergers and Acquisitions: PC Maker Lenovo Moves to Diversify Its Core Business
  • Chapter Overview
  • Why M&As Happen
  • Historical Developments in M&As
  • Understanding Corporate Restructuring Activities
  • Alternative Takeover Strategies
  • The Role of Holding Companies in M&As
  • The Role of Employee Stock Ownership Plans (ESOPs) in M&As
  • Business Alliances as Alternatives to M&As
  • Participants in the M&A Process
  • The Implications of M&As for Shareholders, Bondholders, and Society
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 2. The Regulatory Environment
  • Inside Mergers and Acquisitions: Gaining Regulatory Approval Often Requires Concessions by Merger Partners
  • Chapter Overview
  • Understanding Federal Securities Laws
  • Understanding Antitrust Legislation
  • The Implications for M&A of the Dodd–Frank Wall Street Reform and Consumer Protection Act
  • State Regulations Affecting M&As
  • Restrictions on Direct Foreign Investment in the United States
  • The U.S. Foreign Corrupt Practices Act
  • Fair Disclosure (Regulation FD)
  • Specific Industry Regulations
  • Environmental Laws
  • Labor and Benefit Laws
  • Cross-Border Transactions
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 3. The Corporate Takeover Market: Common Takeover Tactics, Antitakeover Defenses, and Corporate Governance
  • Inside Mergers and Acquisitions: Clothiers Men’s Wearhouse and Jos. A. Bank Reach Agreement After Lengthy Battle
  • Chapter Overview
  • Corporate Governance
  • Understanding Alternative Takeover Tactics
  • Other Tactical Considerations
  • Developing a Bidding Strategy
  • Activist Investors: Gaining Influence Without Control
  • Understanding Alternative Takeover Defenses
  • The Impact of Takeover Defenses on Shareholder Value
  • Some Things to Remember
  • Chapter Discussion Questions

Part II: The Mergers and Acquisitions Process: Phases 1–10

• Part II. The Mergers and Acquisitions Process: Phases 1–10
• Chapter 4. Planning: Developing Business and Acquisition Plans: Phases 1 and 2 of the Acquisition Process
  • Inside Mergers and Acquisitions: Consolidation in the Supermarket Industry
  • Chapter Overview
  • The Role of Planning in M&As
  • The Merger and Acquisition Process
  • Phase 1: Building the Business Plan
  • The Business Plan as a Communication Document
  • Phase 2: Building the Merger–Acquisition Implementation Plan
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 5. Implementation: Search Through Closing: Phases 3–10 of the Acquisition Process
  • Inside M&A: When Patience Pays—Signet Jewelers to Buy Zales
  • Chapter Overview
  • Phase 3: The Search Process
  • Phase 4: The Screening Process
  • Phase 5: First Contact
  • Phase 6: Negotiation
  • Phase 7: Developing the Integration Plan
  • Phase 8: Closing
  • Phase 9: Implementing Postclosing Integration
  • Phase 10: Conducting a Postclosing Evaluation
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 6. Postclosing Integration: Mergers, Acquisitions, and Business Alliances
  • Inside Mergers and Acquisitions: The Challenges of Airline Integration
  • Chapter Overview
  • The Role of Integration in Successful M&As
  • Integration Is a Process, Not an Event
  • Integrating Business Alliances
  • Integrating Family Owned Firms
  • Some Things to Remember
  • Chapter Discussion Questions

Part III: Mergers and Acquisitions Valuation and Modeling

• Part III. Mergers and Acquisitions Valuation and Modeling
• Chapter 7. Mergers and Acquisitions Cash Flow Valuation Basics
  • Inside M&A: Valuation Methodologies, Fairness Opinions, and Verizon’s Buyout of Vodafone’s Share of Verizon Wireless
  • Chapter Overview
  • Estimating Required Financial Returns
  • Risk Assessment
  • Calculating Free Cash Flows
  • Applying Discounted Cash Flow Methods
  • Using the Enterprise Method to Estimate Equity Value
  • Valuing Nonoperating Assets
  • Putting It All Together
  • Some Things to Remember
  • Chapter Discussion Questions
  • Practice Problems and Answers
• Chapter 8. Relative, Asset-Oriented, and Real Option Valuation Basics
  • Inside Mergers and Acquisitions: China’s CNOOC Acquires Canadian Oil and Gas Producer Nexen Inc.
  • Chapter Overview
  • Relative Valuation Methods
  • Asset-Oriented Methods
  • The Weighted Average Valuation Method
  • Adjusting Valuation Estimates for Purchase Price Premiums
  • Real Options Analysis
  • Determining When to Use the Different Approaches to Valuation
  • Some Things to Remember
  • Chapter Discussion Questions
  • Practice Problems and Answers
• Chapter 9. Financial Modeling Basics
  • Inside Mergers and Acquisitions: The Role of Financial Models in Executive Decision Making
  • Chapter Overview
  • What Is Financial Modeling?
  • Financial Modeling Data Requirements
  • Common Financial Model Linkages
  • Key Steps in the Valuation Process
  • Model Balancing Mechanism
  • Data Sources
  • Managing the Model
  • Some Things to Remember
  • Chapter Discussion Questions
  • Practice Problems and Answers
• Chapter 10. Analysis and Valuation of Privately Held Firms
  • Inside M&A: Privately Owned La Boulange Café & Bakery Goes Nationwide
  • Chapter Overview
  • What Are Privately Held Companies?
  • Governance Issues
  • Challenges of Valuing Privately Held Companies
  • Process for Valuing Privately Held Businesses
  • Step 1: Adjusting Financial Statements
  • Step 2: Applying Valuation Methodologies to Privately Held Companies
  • Step 3: Developing Discount Rates
  • Step 4: Applying Control Premiums, Liquidity, and Minority Discounts
  • Reverse Mergers
  • Using Leveraged ESOPs to Buy Private Companies
  • Empirical Studies of Shareholder Returns
  • Some Things to Remember
  • Chapter Discussion Questions
  • Practice Problems and Answers

Part IV: Deal Structuring and Financing Strategies

• Part IV. Deal Structuring and Financing Strategies
• Chapter 11. Structuring the Deal: Payment and Legal Considerations
  • Inside Mergers and Acquisitions: Illustrating Bidding Strategies—Apollo’s Takeover of CEC Entertainment
  • Chapter Overview
  • The Deal Structuring Process
  • Form of Acquisition Vehicle and Postclosing Organization
  • Legal Form of the Selling Entity
  • Form of Payment
  • Managing Risk and Reaching Consensus on Purchase Price
  • Constructing Collar Arrangements
  • Form of Acquisition
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 12. Structuring the Deal: Tax and Accounting Considerations
  • Inside M&A: Johnson & Johnson Uses Financial Engineering to Acquire Synthes Corporation
  • Chapter Overview
  • Alternative Tax Structures
  • Taxable Transactions
  • Tax-Free Transactions
  • Other Tax Considerations Affecting Corporate Restructuring
  • Financial Reporting of Business Combinations
  • Impact of Purchase Accounting on Business Combinations
  • Recapitalization (“Recap¿) Accounting
  • Some Things to Remember
  • Chapter Discussion Questions
  • Practice Problems and Answers
• Chapter 13. Financing the Deal: Private Equity, Hedge Funds, and Other Sources of Financing
  • Inside M&A: Verizon Finances Its $130 Billion Buyout of Vodafone’s Stake in Verizon Wireless
  • Chapter Overview
  • How Are M&A Transactions Commonly Financed?
  • What Is the Role of Private Equity, Hedge, and Venture Capital Funds in Deal Financing?
  • LBOs as Financing Strategies
  • What Factors Are Critical to Successful LBOs?
  • How Do LBOs Create Value?
  • Common LBO Deal and Capital Structures
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 14. Applying Financial Models: To Value, Structure, and Negotiate Stock and Asset Purchases
  • Inside Mergers and Acquisitions: Comcast Bids for Time Warner Cable—Evaluating Proposals and Counterproposals
  • Chapter Overview
  • Understanding and Applying M&A Financial Models
  • M&A Models: Stock Purchases
  • M&A Model: Asset Purchase
  • Quantifying Synergy
  • Things to Remember
  • Chapter Discussion Questions
  • Practice Problems and Answers
  • Appendix A Debt Repayment Schedule, Convertible Securities, Interest Rates, and Betas

Part V: Alternative Business and Restructuring Strategies

• Part V. Alternative Business and Restructuring Strategies
• Chapter 15. Business Alliances: Joint Ventures, Partnerships, Strategic Alliances, and Licensing
  • Inside Mergers and Acquisitions: Coke Moves from the Vending Machine into the “In-Home¿ Market
  • Chapter Overview
  • Motivations for Business Alliances
  • What Makes Business Alliances Successful?
  • Alternative Legal Forms of Business Alliances
  • Strategic and Operational Plans
  • Resolving Business Alliance Deal Structuring Issues
  • Empirical Findings
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 16. Alternative Exit and Restructuring Strategies: Divestitures, Spin-Offs, Carve-Outs, Split-Offs, and Tracking Stocks
  • Inside M&A: General Electric Downsizes Its Financial Services Unit
  • Chapter Overview
  • Why Do Firms Exit Businesses?
  • Divestitures
  • Spin-Offs
  • Equity Carve-Outs
  • Split-Offs and Split-Ups
  • Tracking, Targeted, and Letter Stocks
  • Comparing Alternative Exit and Restructuring Strategies
  • Choosing Among Divestiture, Carve-Out, and Spin-Off Restructuring Strategies
  • Determinants of Returns to Shareholders Resulting from Restructuring Strategies
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 17. Alternative Exit and Restructuring Strategies: Bankruptcy Reorganization and Liquidation
  • Inside M&A: American Airlines Emerges from the Protection of Bankruptcy Court
  • Chapter Overview
  • Business Failure
  • Voluntary Settlements Outside of Bankruptcy
  • Reorganization and Liquidation in Bankruptcy
  • Alternative Options for Failing Firms
  • The Increasing Role of Hedge Funds in the Bankruptcy Process
  • Failing Firms and Systemic Risk
  • Predicting Corporate Default and Bankruptcy
  • Empirical Studies of Financial Distress
  • Some Things to Remember
  • Chapter Discussion Questions
• Chapter 18. Cross-Border Mergers and Acquisitions: Analysis and Valuation
• Inside Mergers and Acquisitions: European Mobile Phone and Cable Industry Shows Signs of Consolidation
• Chapter Overview
• Globally Integrated Markets Versus Segmented Capital Markets
• Motives for International Expansion
• Common International Market Entry Strategies
• Structuring Cross-Border Deals
• Financing Cross-Border Deals
• Planning and Implementing Cross-Border Transactions in Emerging Countries
• How Are Cross-Border Transactions Valued?
• Empirical Studies of Cross-Border Transactions
• Some Things to Remember
• Chapter Discussion Questions