Mergers, Acquisitions, and Other Restructuring Activities

An Integrated Approach to Process, Tools, Cases, and Solutions

11th Edition - September 26, 2021
Imprint: Academic Press
Author: Donald DePamphilis
Language: English
Paperback ISBN:
9 7 8 - 0 - 1 2 - 8 1 9 7 8 2 - 0
eBook ISBN:
9 7 8 - 0 - 3 2 3 - 9 1 0 5 4 - 5

Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions, Eleventh Edition presents the most current and comprehen… Read more

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Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions, Eleventh Edition presents the most current and comprehensive M&A information available. Organized according to the context in which topics normally occur in the M&A process, the book covers M&A environments, M&A processes, M&A valuation and modeling, deal structuring and financing strategies, and alternative business and restructuring strategies. Covering industries worldwide, this new edition illustrates the most germane strategies and tactics in today's marketplace. It includes substantially more ancillary materials than previous editions, including an extensive test bank, chapter summaries, and instructor and student PowerPoint slides.

More than 100 new references to relevant academic research published since 2018 make the 11th edition a balanced, comprehensive guide to the complex and dynamically changing world of M&A.

Cover image
Title page
Table of Contents
Copyright
Dedication
About the Author
Preface
Acknowledgments
Praise for various editions
Part I. The mergers and acquisitions environment
Introduction
Chapter 1. An introduction to mergers, acquisitions, and other restructuring activities
Inside mergers and acquisitions: the growing popularity of digital payments drives a record-setting deal in the electronics payments industry
Chapter overview
Why do M&As happen?
M&A waves
Understanding corporate restructuring activities
Alternative takeover strategies
The role of holding companies in mergers and acquisitions
The role of employee stock ownership plans in M&As
Business alliances as alternatives to M&As
Participants in the mergers and acquisitions process
The impact of protectionism on M&As
The impact of the 2020 coronavirus pandemic on M&As
The implications of M&As for shareholders, bondholders, and society
M&As and corporate socially responsible investing
The implications of the Biden administration for M&As
Some things to remember
Chapter discussion questions
End-of-chapter case study: Occidental petroleum outbids Chevron in high-stakes energy deal
Discussion questions
Chapter 2. The regulatory environment
Inside mergers and acquisitions: AT&T’s merger with Time Warner withstands regulatory scrutiny
Chapter overview
Understanding federal securities laws
Understanding antitrust (competition) legislation
M&A implications of the Dodd-Frank Wall Street Reform and Consumer Protection Act (including 2018 revisions)
M&A implications of privacy, data protection, and copyright regulations
State regulations affecting M&As
Restrictions on direct foreign investment in the United States
Restrictions on foreign acquisitions by US acquirers
The US Foreign Corrupt Practices Act
The Holding Foreign Companies Accountable Act
Specific industry regulation
Environmental laws
Labor and benefit laws
Cross-border transactions
Some things to remember
Chapter discussion questions
End-of-chapter case study: behavioral remedies as an alternative to structural remedies in addressing anticompetitive practices
Discussion questions
Chapter 3. The corporate takeover market: common takeover tactics, antitakeover defenses, and corporate governance
Inside mergers and acquisitions: proxy fights—to support a takeover or simply to gain influence?
Chapter overview
Corporate governance: protecting and managing stakeholder interests
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
End-of-chapter case study: new technologies drive value chain consolidation
Discussion questions
Part II. The mergers and acquisitions process: Phases 1 through 10
Introduction
Chapter 4. Planning: developing business and acquisition plans: phases 1 and 2 of the acquisition process
Inside M&As: when cost cutting alone is not a sustainable strategy
Chapter overview
The role of planning in M&As
The M&A process
Phase 1: building the business plan or model
The business plan as a communication document
Phase 2: building the M&A implementation plan
Some things to remember
Chapter discussion questions
End-of-chapter case study: Newmont becomes global leader in the gold-mining industry
Discussion questions
Chapter 5. Implementation: search through closing: phases 3 to 10 of the acquisition process
Inside M&A: Salesforce.com makes a big bet to move beyond its core customer relationship management business
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: stop, assess, and learn
The application of technology to the M&A process
Some things to remember
Chapter discussion questions
End-of-chapter case study: Roche acquires Spark Therapeutics in move to replenish drug pipeline
Discussion questions
Chapter 6. Postclosing integration: mergers, acquisitions, and business alliances
Inside M&As: setting postmerger integration goals and tactics before closing
Chapter overview
The degree of integration varies by type of acquirer and deal
The role of integration in successful acquisitions
Integration is a process, not an event
Integrating business alliances
Some things to remember
Chapter discussion questions
End-of-chapter case study: culture clash—AT&T buys Time Warner
Discussion questions
Part III. Mergers and acquisitions valuation and modeling
Introduction
Chapter 7. Mergers and acquisitions cash flow valuation basics
Inside M&As: valuation methods and outcomes in M&A appraisal cases
Chapter overview
Economic implications of negative interest rates
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
Some things to remember
Chapter discussion questions
Practice problems and answers
End-of-chapter case study: did United Technologies overpay for Rockwell Collins?
Discussion questions
Chapter 8. Relative, asset-oriented, and real-option valuation basics
Inside M&As: real options can provide management with substantial strategic flexibility
Chapter overview
Relative-valuation methods
Asset-oriented methods
The weighted-average valuation method
Real-options analysis
Determining when to use the different approaches to valuation
Valuing initial public offerings
What do valuation professionals do in practice?
Some things to remember
Chapter discussion questions
Practice problems and answers
End-of-chapter case study: did British American Tobacco overpay for Reynolds American?
Discussion questions
Chapter 9. Financial modeling basics
Inside M&As: the role of financial models in the M&A process
Chapter overview
What is financial modeling?
Financial modeling data requirements
Common financial model linkages
Modeling changes in US corporate tax laws
Key steps in the valuation process
Model-balancing mechanisms
Data sources
Managing the model
Addressing valuation issues in a near-zero interest rate environment
Some things to remember
Chapter discussion questions
Practice problems and answers
End-of-chapter case study: Life Technologies undertakes a strategic review
Discussion questions
Chapter 10. Analysis and valuation of privately held firms
Inside M&A: factors impacting the success or failure of acquisitions of privately owned firms
Chapter overview
Ownership structure, agency conflicts, and stock market returns
How family control affects M&A activity
Private versus public company governance
Challenges of valuing privately held companies
Process for valuing privately held businesses
Early-stage investment
Taking private companies public
Using leveraged employee stock ownership plans to buy private companies
Empirical studies of shareholder returns
Some things to remember
Chapter discussion questions
Practice problems and answers
End-of-chapter case study: “going public”: reverse merger or initial public offering?
Discussion questions
Part IV. Deal-structuring and financing strategies
Introduction
Chapter 11. Structuring the deal: Tax and accounting considerations
Inside M&A: GlaxoSmithKline undertakes a cash tender offer to acquire Tesaro
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
M&A options and warrants takeover strategies
Form of acquisition
Some things to remember
Chapter discussion questions
End-of-chapter case study: Disney’s bold move in the direct-to-consumer video business
Discussion questions
Chapter 12. Structuring the deal: tax and accounting considerations
Inside M&A: megamerger creates the world’s second-largest aerospace and defense contractor
Chapter overview
Understanding tax authority communications
Alternative tax structures
Taxable transactions
Tax-free transactions
Tax Cuts and Jobs Act of 2017
State and local tax issues
International taxes
Tax inversions
Master limited partnerships, real estate investment trusts, and yield cos
Financial reporting of business combinations
Impact of acquisition accounting on business combinations
Recapitalization (“recap”) accounting
Putting it all together: takeover and deal-structuring strategies
Implications of the Biden Administration’s tax policy for M&As
Some things to remember
Chapter discussion questions
Practice problems and answers
End-of-chapter case study: Bristol-Myers Squibb buys Celgene in the biggest biopharma deal in history
Discussion questions
Chapter 13. Financing the deal: private equity, hedge funds, and other sources of financing
Inside M&As: financing megamergers and acquisitions
Chapter overview
The role of public and private financial markets
How are M&A transactions commonly financed?
What is the role of private equity, hedge, and venture capital funds in deal financing?
Impact of tax reform on M&A financing
Fun with acronyms: the transition from LIBOR to SOFR
Leveraged buyouts as financing strategies
What factors are critical to successful leveraged buyouts?
How do leveraged buyouts create value?
Common leveraged buyout deal and capital structures
Some things to remember
Chapter discussion questions
End-of-chapter case study: implications of a credit rating downgrade after a merger or acquisition
Discussion questions and answers
Chapter 14. Highly leveraged transactions: leveraged buyout valuation and modeling basics
Inside M&As: private equity firms partner to acquire Johnson Controls' power solutions business
Chapter overview
How are leveraged buyouts valued?
The cost of capital method
Adjusted present value method
Comparing the cost of capital and adjusted present value methods
Leveraged buyout valuation and structuring model basics
Evaluating leveraged buyout opportunities
Leveraged buyout model template
Some things to remember
Chapter discussion questions
Practice problems
End-of-chapter case study: investor group takes Dun & Bradstreet private in a leveraged buyout
Discussion questions
Chapter 15. Applying financial models: to value, structure, and negotiate stock and asset purchases
Inside M&As: the role of financial models in getting to yes on price
Chapter overview
Understanding and applying M&A financial models
M&A models: stock purchases
M&A models: asset purchases
Quantifying synergy
Things to remember
Chapter discussion questions
Practice problems and answers
End-of-chapter case study: Thermo Fisher acquires Life Technologies
Discussion questions
Appendix A: debt repayment schedule, convertible securities, interest rates, and betas
Part V. Alternative business and restructuring strategies
Introduction
Chapter 16. Domestic and cross-border business alliances: joint ventures, partnerships, strategic alliances, and licensing
Inside M&As: Altria makes a big bet on cannabis
Chapter overview
Motivations for business alliances
What makes business alliances successful?
Alternative legal forms of business alliances
Bilateral versus multilateral alliances
Strategic and operational plans
Resolving business alliance deal-structuring issues
Challenges of cross-border joint ventures
Potential impediments to cross-border alliances and minority investments
Empirical findings
Some things to remember
Chapter discussion questions
End-of-chapter case study: Disney creates order out of chaos
Discussion questions
Chapter 17. Alternative exit and restructuring strategies: divestitures, spin-offs, carve-outs, split-offs, and tracking stocks
Inside M&As: reducing leverage through restructuring
Chapter overview
Why do firms exit businesses?
Divestitures
Spin-offs
Equity carve-outs
Split-offs and split-ups
Tracking, targeted, and letter stocks
Restructuring implementation issues
Key restructure legal documents
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
End-of-chapter case study: Gardner Denver and Ingersoll Rand’s industrial segment merge in a Reverse Morris Trust
Discussion questions
Chapter 18. Alternative exit and restructuring strategies: bankruptcy, reorganization, and liquidation
Inside M&As: iHeartMedia rises from the ashes
Chapter overview
Business failure
Voluntary settlements outside of bankruptcy court
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
End-of-chapter case study: American icon survives Chapter 11 filing
Discussion questions
Chapter 19. Cross-border mergers and acquisitions: analysis and valuation
Inside M&As: regulatory risk rises amid growing global trade tensions
Chapter overview
Is globalization giving way to reduced capital flows, regionalism, and slower economic growth?
Motives for international expansion
Common international market entry strategies
Navigating cross-border deals amid trade frictions and “black swan” events
Cross-border M&As, institutional voids, and human rights
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 financial returns on cross-border transactions
Some things to remember
Chapter discussion questions
End-of-chapter case study: Takeda’s high-risk bet to change its strategy and corporate culture
Discussion questions
References
Glossary
Index

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