Mergers & Acquisitions

The following sections are included:

• Contents
• Preface
• About the Editor
• About the Contributors

The following sections are included:

• Introduction
• Growth Through Mergers
• Merger Trends and Main Influences
• M&A Data
• M&A Theories/Models
• Process, Performance
• The Book’s Scope

This chapter reviews mergers and acquisitions (M&As) data and trends, merger models and performance, addresses mergers versus internal development, reviews the merger process and decision making, discusses M&A transactional forms, deals protection provisions, consideration and exchange ratios and pricing collars.

The following sections are included:

• Introduction
• The Purpose of the Due Diligence Process
• The Different Types of Buyers and Targets
• Types of Due Diligence
• Roles
• The Timing of the Due Diligence Process
• A Word on Sell-Side and Vendor Due Diligence
• The Role of Due Diligence Post Acquisition
• The Forest for the Trees
• Summary

The following sections are included:

• Introduction
• State Laws and Regulations
• Federal Securities Laws
• Tender Offer
• Antitrust Laws
• The Horizontal Merger Guidelines
• Regulation of Acquisitions by Foreign Persons (Exon-Florio)
• Industry-Specific Regulations
• Sarbanes–Oxley Act of 2002
• Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010
• Summary

2015 was the biggest year ever for global mergers and acquisitions (M&As) transactions with over $4 trillion of mergers being signed — which may not include the tens of thousands of middle-market and smaller deals that are not reported. So far, it seems like 2016 will be a bit slower than 2015, but for 2017 and beyond, it looks like M&A activity will continue at a fast pace. 84% of industry experts surveyed by KPMG expect to initiate an M&A transaction in 2017, and almost 75% anticipate doing multiple deals. In this type of fast-paced M&A environment, boards need to be up to speed on current trends and best practices. The fuel behind the acceleration of M&A activity breaks down into several subcomponents:

• the low-cost and virtually unlimited access to capital for transactions and investment;
• globalization and the acceleration of growth in emerging markets have led to an increase in both outbound and inbound cross-border transactions;
• technology and the velocity of change and intensity of competition have forced companies to diversity, integrate supply chains and gobble up market share; and
• the graying of the world’s population means that the baby boomer generation is preparing to sell or transfer the ownership control of the enterprises they launched 20 or 30 years ago — Mass Mutual estimates that over $40 trillion in intergenerational wealth will be transferred from 2014 to 2025 across the globe.

The following sections are included:

• Introduction
• Antitakeover Defense Measures — Why Do We Need Them?
• The Stakeholders
• Certificate of Incorporation and By-laws Provisions
• Effectiveness and Destaggering
• Adopting Staggered Board Provisions and Destaggering
• Shareholder’s Rights Plan — The Poison Pill
• Recent Trends
• Additional Charter and By-laws Provisions
• Defense Measures — Reactions (Economic Defense)
• Teva-Mylan-Perrigo Takeover Actions as a Case Study
• Additional Matters Relating to Antitakeover Defense Measures
• Summary and Notes

The following sections are included:

• Introduction
• The Income Approach
• When Beta is Unavailable: Unlevered and Relevered Betas
• The Dividend Discount Model: An Alternative to CAPM
• The Adjusted Present Value (APV)
• Flow to Equity (FTE)
• The Market Approach
• Asset-Based Valuation
• Summary

This chapter follows the general process of valuing a privately held business and it discusses five broad steps of the valuation process…

The following sections are included:

• Introduction
• Accounting for Business Combinations, FASB ASC 805
• Main Features of ASC 805
• Goodwill Impairment, FASB ASC 350, Intangibles and Others
• Summary

In my own case the words of such an act as the Income Tax, e.g., merely dance before my eyes in a meaningless procession: cross-reference to cross-reference, exception upon exception — couched in abstract terms that offer no handle to seize hold of — leave in my mind only a confused sense of some vitally important, but successfully concealed, purport, which it is my duty to extract, but which is within my power, if at all, only after the most inordinate expenditure of time…. Much of the law is now as difficult to fathom, and more and more of it is likely to be so; for there is little doubt that we are entering a period of increasingly detailed regulation, and it will be the duty of judges to thread the path — for path there is — through these fantastic labyrinths…

The following sections are included:

• Introduction
• What Makes a Good LBO Candidate
• The Concept of Leverage and Its Advantages for Enhancing Equity Returns
• Structuring an LBO
• LBO Model — Building the Model and Testing the Debt Repayment & Equity Return on Excel
• Securities Exchange Commission & Bank Regulations
• Summary of Key Points
• Recommended Reading

The following sections are included:

• Introduction
• Types of Divestiture
• Triggers of a Divestment
• Elements of a Divestment Process
• TSAs and Stranded Costs
• Summary of Key Points Addressed in This Chapter and the Implications for Market Participants and Reader
• Reference

The following sections are included:

• Introduction
• Cross-Border M&As
• Theory: Factors Affecting Cross-Border Deals
• Process
• Performance & Risk
• Valuation
• Emerging Markets
• Cross-Border Investment in the US
• Summary Note
• Appendix: Direct Investment Positions for 2016 Country and Industry Detail
• U.S. Direct Investment Abroad (Outward)
• Changes by component
• Financial transactions
• Other changes in position
• Changes by area and by country
• Indirect ownership
• Foreign Direct Investment in the United States (Inward)
• Changes by component
• Financial transactions
• Updates to the Statistics

If an acquisition target has been experiencing financial distress or is insolvent, the transaction parties may want to effectuate an M&A transaction in the context of a bankruptcy proceeding under Chapter 11 of title 11 of the US Code (the “Bankruptcy Code”). There are a number of advantages to effectuating an M&A transaction inside a Chapter 11 proceeding, but there are also certain risks to attempting such a transaction…

The following sections are included:

• Introduction
• Part A
• Part B
• Conclusion

The following sections are included:

• Introduction
• Purpose of PMI
• Legal and Regulatory Considerations
• Analytical Approaches, Models, Practices
• Integration 100-Day Planning and Integration Playbook Development
• Postclose Execution
• Integration Transition and Assessment Summary

The following section is included:

• Index