Mergers & Acquisitions: A Condensed Practitioner's Guide

MERGERS & ACQUISITIONS: A Condensed Practitioner's Guide......Page 5
Contents......Page 9
Preface......Page 15
About the Author......Page 19
Free On-Line Resources by Steven Bragg......Page 21
WHY WE ACQUIRE......Page 25
WHY A TARGET SELLS......Page 29
ACQUISITION STRATEGY......Page 31
THE BASIC ACQUISITION PROCESS FLOW......Page 34
THE AUCTION PROCESS FLOW......Page 42
LOCATING AND CULLING ACQUISITION TARGETS......Page 45
THE OPTIMAL TARGET SIZE......Page 49
EVALUATE ACQUISITION TARGETS WITH ALLIANCES......Page 50
ACQUISITION RISKS FOR THE BUYER—VALUATION......Page 52
ACQUISITION RISKS FOR THE BUYER—LEGAL......Page 53
ACQUISITION RISKS FOR THE SELLER......Page 55
ACQUISITION FOLLOW-UP ACTIVITIES......Page 56
THE HOSTILE TAKEOVER......Page 57
DEFENDING AGAINST A HOSTILE TAKEOVER......Page 59
SUMMARY......Page 63
THE ACQUISITION TEAM......Page 65
ATTORNEYS......Page 66
BOARD OF DIRECTORS......Page 67
BROKERS......Page 68
THE CHIEF EXECUTIVE OFFICER......Page 70
INVESTMENT BANKERS......Page 71
INVESTOR AND PUBLIC RELATIONS......Page 72
LENDERS......Page 74
LINE MANAGERS......Page 75
SPECIALIST CONSULTANTS......Page 76
PLAYERS IN HOSTILE TAKEOVERS......Page 77
SUMMARY......Page 78
ALTERNATIVE VALUATION METHODS......Page 81
SYNERGY GAINS......Page 89
THE DISCOUNTED CASH FLOW (DCF) MODEL......Page 90
CONSTRUCTING CASH FLOW SCENARIOS......Page 93
CASH FLOW ADJUSTING FACTORS......Page 95
THE EARNOUT......Page 98
QUALITATIVE FACTORS......Page 99
WHICH VALUATION METHOD IS BEST?......Page 101
THE METHOD OF PAYMENT......Page 102
SUMMARY......Page 106
REASONS FOR USING A TERM SHEET......Page 107
COMPONENTS OF A TERM SHEET......Page 109
SUMMARY......Page 116
DUE DILIGENCE TEAM STAFFING......Page 117
DUE DILIGENCE INTERVIEWS......Page 119
DUE DILIGENCE—OVERVIEW......Page 120
DUE DILIGENCE—MARKET OVERVIEW......Page 123
DUE DILIGENCE—CULTURE......Page 125
DUE DILIGENCE—PERSONNEL......Page 126
DUE DILIGENCE—INTELLECTUAL PROPERTY......Page 130
DUE DILIGENCE—BRANDS......Page 131
DUE DILIGENCE—RISK MANAGEMENT......Page 133
DUE DILIGENCE—CAPACITY......Page 134
DUE DILIGENCE—ASSETS......Page 137
DUE DILIGENCE—LIABILITIES......Page 140
DUE DILIGENCE—EQUITY......Page 143
DUE DILIGENCE—PROFITABILITY......Page 144
DUE DILIGENCE—CASH FLOW......Page 148
DUE DILIGENCE—CUSTOMERS......Page 150
DUE DILIGENCE—PRODUCT DEVELOPMENT......Page 152
DUE DILIGENCE—PRODUCTION PROCESS......Page 154
DUE DILIGENCE—LEGAL ISSUES......Page 156
DUE DILIGENCE FOR A BUSINESS SEGMENT......Page 160
DUE DILIGENCE—FORECASTS......Page 161
DUE DILIGENCE—MISSING INFORMATION......Page 162
COMPLEXITY ANALYSIS......Page 163
DUE DILIGENCE—RED FLAGS......Page 164
DUE DILIGENCE—SELLER’S PERSPECTIVE......Page 167
DUE DILIGENCE—DOCUMENTATION......Page 168
SUMMARY......Page 170
COMPONENTS OF A PURCHASE AGREEMENT......Page 171
THE MERGER SECTION......Page 172
THE LETTER OF TRANSMITTAL SECTION......Page 177
THE REPRESENTATIONS AND WARRANTIES SECTION—SELLER......Page 178
THE REPRESENTATIONS AND WARRANTIES SECTION—BUYER......Page 186
THE SURVIVAL OF REPRESENTATIONS AND WARRANTIES SECTION......Page 187
THE ADDITIONAL AGREEMENTS SECTION......Page 189
THE CLOSING SECTION......Page 191
THE TERMINATION PRIOR TO CLOSING SECTION......Page 192
THE SUPPORTING DOCUMENTS SECTION......Page 193
THE SELLER DISCLOSURE SCHEDULE......Page 194
THE CLOSING MEMORANDUM......Page 195
SPECIAL CLAUSES......Page 197
POST-CLOSING ACTIVITIES......Page 201
NEGOTIATING THE PURCHASE AGREEMENT......Page 202
MECHANICS OF THE CLOSE......Page 203
SUMMARY......Page 204
INTEGRATION TIMING......Page 205
INTEGRATION PLANNING......Page 206
SYNERGY REALIZATION......Page 210
THE INTEGRATION MANAGER......Page 216
THE INTEGRATION TEAM......Page 219
INTEGRATION COMMUNICATIONS—INTERNAL......Page 220
INTEGRATION COMMUNICATIONS—EXTERNAL......Page 222
ANGER MANAGEMENT......Page 223
PROGRESS REPORTING—EXTERNAL......Page 224
CULTURAL ISSUES......Page 225
EMPLOYEE INTEGRATION—QUALIFICATION ASSESSMENT......Page 229
EMPLOYEE INTEGRATION—JOB POSITIONING......Page 230
EMPLOYEE INTEGRATION—RELOCATIONS......Page 232
EMPLOYEE INTEGRATION—KEY EMPLOYEES......Page 233
EMPLOYEE INTEGRATION—FOUNDERS......Page 236
EMPLOYEE INTEGRATION—UNIONS......Page 237
LAYOFFS......Page 238
COMPENSATION INTEGRATION......Page 239
SALES INTEGRATION......Page 241
PROCESS INTEGRATION......Page 243
TECHNOLOGY INTEGRATION......Page 244
CONTROLS INTEGRATION......Page 245
INTEGRATION METRICS......Page 246
INTEGRATION PACING......Page 248
SUMMARY......Page 249
PURCHASE PRICE ALLOCATION......Page 251
FAIR VALUE DETERMINATION......Page 252
INTANGIBLES IDENTIFICATION......Page 253
EXAMPLE OF THE ACCOUNTING FOR AN ACQUISITION (WITH GOODWILL)......Page 257
EXAMPLE OF THE ACCOUNTING FOR AN ACQUISITION (WITH NO GOODWILL)......Page 261
INITIAL GOODWILL IMPAIRMENT TESTING......Page 263
ONGOING GOODWILL IMPAIRMENT TESTING......Page 265
EXAMPLE OF GOODWILL IMPAIRMENT TESTING......Page 266
PUSH-DOWN ACCOUNTING......Page 269
SUMMARY......Page 273
THE TAX IMPLICATIONS OF AN ACQUISITION......Page 275
THE ASSET ACQUISITION......Page 277
THE TYPE ‘‘A’’ REORGANIZATION......Page 279
THE TYPE ‘‘B’’ REORGANIZATION......Page 280
THE TYPE ‘‘C’’ REORGANIZATION......Page 281
THE TYPE ‘‘D’’ REORGANIZATION......Page 282
THE REVERSE TRIANGULAR MERGER......Page 284
APPRAISAL RIGHTS......Page 285
SUMMARY......Page 286
ANTI-TRUST REGULATIONS......Page 289
INTERNATIONAL ANTI-TRUST REGULATIONS......Page 292
ENVIRONMENTAL REGULATIONS......Page 293
SUMMARY......Page 295
Appendix A: Due Diligence Checklist......Page 297
Index......Page 315