The Art of M&A, 3^rd Ed.

A Merger/Acquisition/Buyout Guide

Alexandra Reed Lajoux, Stanley Foster Reed

Publisher: McGraw-Hill, 1999

ISBN: 0-07-052660-5

Synopsis:

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Table of Contents:

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• Chapter 1 Getting Started in Mergers and Acquisitions
• Introduction
• Basic Terms
• Concluding Comments
• Chapter 2 Planning and Finding
• Introduction
• Strategic Planning for Operating Companies
• In-House Search
• Brokers and Finders
• Using Intermediaries
• Role of Investment and Commercial Banks in M&A
• General Regulatory Considerations for Buyers
• Antitrust Considerations for Acquisitions
• Hart-Scott Rodino
• Concluding Comments
• Appendix 2A — Revision to the Horizontal Merger Guidelines Issued by the U.S. Department of Justice and the Federal Trade Commission
• Chapter 3 Valuation and Pricing
• Introduction
• Valuation Fundamentals
• Pricing Issues
• Expressing the Purchase Price in the Acquisition Agreement
• Concluding Comments
• Exhibit 3-1, Estimating the Cost of Capital
• Chapter 4 Financing and Refinancing
• Introduction
• Highly Leveraged Transactions
• Minimizing Borrowing
• Pros and Cons of Preserving Debt and Lease Obligations
• Determining Financing Structure
• Senior Debt
• Sale-Leasebacks
• The Bank Book and Commitment Letter
• Fraudulent Conveyance and other Litigation Concerns
• Other Principal Issues in Senior Loan Agreements
• Insurance Company Financing
• Junk Bonds
• Bridge Loans
• Equity Investment Funds
• Seller Takeback Financing
• Registration Rights
• Intercreditor Issues
• Subordination Issues
• Intercreditor Agreements
• Refinancing Issues
• Concluding Comments
• Appendix 4A — Typical Subordination Provisions of Publicly Issued Notes
• Appendix 4B — Typical Subordination Provisions of Privately Placed Institutional Notes
• Appendix 4C — Typical Subordination Provisions of Seller Notes
• Exhibit 4-1, Installment Sale Models
• Chapter 5 Structuring M/A/B Transactions: General, Tax, and Accounting Considerations
• Introduction
• General Considerations
• Tax Considerations
• Accounting Considerations
• Concluding Comments
• Transaction Diagrams
• Figure 5-1, Stock Purchase
• Figure 5-2, Asset Purchase
• Figure 5-3, Taxable Forward Merger
• Figure 5-4, Taxable Reverse Merger
• Figure 5-5, Taxable Forward Subsidiary Merger
• Figure 5-6, Tax-Free Forward Merger (A Reorganization)
• Figure 5-7, Tax-Free Forward Triangular Merger [Hybrid A Reorganization — Section 368(a)(2)(D)]
• Figure 5-8, Tax-Free Acquisition of Stock for Voting Stock (B Reorganization)
• Figure 5-9, Acquisition of Property for Voting Stock (C Reorganization)
• Figure 5-10, Acquisition of Property for Voting Stock (D Reorganization)
• Figure 5-11, National Starch Transaction (Section 351 Acquisition)
• Chapter 6 The Due Diligence Inquiry
• Introduction
• Getting Started
• Litigation Analysis
• Environmental Exposure Analysis
• Emerging Legal Issues
• Do-It-Yourself Due Diligence
• Assessing Information
• Duration of Due Diligence
• Concluding Comments
• Appendix 6A — Due Diligence Checklist
• Appendix 6B — Sample Confidentiality Agreement
• Chapter 7 Pension, Labor, and Compensation Concerns
• Introduction
• Compensation Basics
• Employee Benefit Plans
• Determining Plan Assets and Liabilities and Their Effect on Company Books
• Plan Split-Ups and Partial Terminations
• Underfunded and Overfunded Plans
• Employee Stock Ownership Plans
• ESOP Securities Issues
• Using Non-ESOP Stock Plans
• Plan Holding Stock
• Effect on Corporate Structure
• Problems in Acquisitions of Unionized Companies
• Concluding Comments
• Chapter 8 Negotiating the Letter of Intent and the Acquisition Agreement
• Introduction
• The Letter of Intent
• The Acquisition Agreement
• Components of the Agreement
• Introductory Material
• Representations and Warranties
• Covenants
• Conditions to Closing
• The Indemnity Section
• Termination Procedures
• Auctions
• Acquisitions from an Affiliated Group
• Transactions Involving Public Companies
• Negotiating amd Documenting an MBO
• Employment Agreements
• Stockholders' Agreements
• Concluding Comments
• About the Appendices
• Appendix 8A — Sample Letter of Intent
• Appendix 8B — Typical Merger Agreement and Commentary
• Chapter 9 Closing
• Introduction
• The Basics of Closing
• Pre-Closing
• Closing
• Wire Transfers
• Post-Closing
• Planning Aids
• Closing Memorandum
• Concluding Comments
• Appendix 9A — Merger of Target Acquisition Corp. into Target Co. Inc. Closing Memorandum
• Chapter 10 Postmerger Integration
• Introduction
• Postmerger Performance: The Basics
• Integration Elements in the Acquisition Agreement
• The Integration Plan
• The Role of Outsiders in Planning M&A Integration
• Communicating the Integration Plan
• Integrating Human Resources
• Integrating Assets (on Paper and in Reality)
• Integrating Commitments to Employees
• Concluding Comments
• Appendix 10A — Principles for Business: The Caux Round Table
• Appendix 10B — A Master Checklist for Postmerger Integration
• Chapter 11 Workouts and Bankruptcies
• Introduction
• Workouts
• Bankruptcies
• Prepackaged Bankruptcies
• State Insolvency Procedures
• Investment Opportunities
• Bankruptcy Information Sources
• Concluding Comments
• Chapter 12 Special Issues for M&A in Public Companies
• Introduction
• Legal and Business Considerations
• Tender Offer Basics
• Proxy Solicitation Disclosures
• Merger Disclosure Issues
• Director Responsibilities in Responding to Unsolicited Bids
• Insider Trading
• Financing the Public Transaction
• Considerations Applicable to Hostile Acquisitions
• Antitrust Defenses
• Restructuring Defenses
• Poison Pills
• Charter and Bylaw Amendments
• Defensive Sales or Acquisitions
• Defensive Payments
• Related State Law
• Concluding Comments
• Chapter 13 M&A in Family Businesses, Partnerships, Franchises, and Nonprofits
• Introduction
• Family Businesses
• Partnerships
• Franchises
• Nonprofits
• Concluding Comments
• Chapter 14 Beyond M&A: Spin-Offs and Strategic Alliances
• Introduction
• Spin-Offs
• Strategic Alliances
• Concluding Comments
• Appendix 14A — The AT&T Spin-Offs
• Appendix 14B — The Joint Venture Agreement: A Checklist from the Regional and Economic Development Services of Saskatchewan, Canada
• Appendix 14C — Diagrams
• Exhibit 14-1, Spin-Offs
• Exhibit 14-2, Split-Offs
• Exhibit 14-3, Split-Ups
• Chapter 15 Special Issues for Transactions with International Aspects
• Introduction
• Nontax Issues Regarding Foreign Investment in the United States (Inbound)
• Nontax Issues Regarding U.S. Investment Abroad (Outbound)
• International Tax and Disclosure Considerations
• Tax Considerations in Inbound Acquisitions
• Tax Considerations in Outbound Acquisitions
• Concluding Comments
• Epilogue M&A in the New Millenium
• Introduction
• The Megamerger Wave
• The "Merger Wave" Concept
• Problems with the Merger Wave Concept
• The First Wave (Crest:1890s)
• The Second Wave (Crest: 1920s)
• The Third Wave (Crest: 1960s)
• The Fourth Wave (Crest: 1980s)
• The Fifth Wave (Crest: 1990s)
• The Sixth Wave
• M&A: The Ultimate Entrepreneurship
• Case A WOFC Case Study: J.T. Smith Consultants
• The Case
• The WOFC Sessions
• Discussion and Observations
• Growth Variables
• Marketing-Related Variables
• Operations
• The Market Intensification Mode
• The Vertical Integration Mode
• The Diversification Mode
• Exhibit Case-1, Schedule for J.T. Smith Strategic Planning Meeting
• Exhibit Case-2, Strength Analysis (Fit Chart Supplement)
• Exhibit Case-3, Weakness Analysis (Fit Chart Supplement)
• Exhibit Case-4, Description of Potential Variables
• Exhibit Case-5, Opportunity Description
• Exhibit Case-6, Stanley Foster Reed's Systems Approach to Corporate Growth
• Exhibit Case-7, Instant Delphi Tally Sheet for Fit Chart
• Exhibit Case-8, Fit Chart: J.T. Smith Consultants
• Exhibit Case-9, A Wheel of Opportunity for J.T. Smith Consultants