Mergers and Acquisitions Basics

PrefaceAcknowledgmentsChapter 1. Introduction to Negotiating Mergers and Acquisitions Key Participants in Negotiating Mergers and Acquisitions Senior/Operating Management Investment Bankers Lawyers Accountants Prenegotiation: Profiling the Target Market and Firm Profiling the Market/Industry Profiling the Firm Estimating the Price Range of an Initial Offer Prenegotiation: First Contact Confidentiality Agreement Term Sheet Letter of Intent Negotiation Developing a Negotiating Strategy Concurrent Activities Refining Valuation Deal Structuring Conducting Due Diligence Developing the Financing Plan or Strategy: The Reality Check A Case in Point: Pfizer Acquires Wyeth in an Attempt to Kick-Start GrowthChapter 2. Selecting the Form of Acquisition Vehicle and Postclosing Organization Alternative Acquisition Vehicle and Postclosing Organizational Structures Corporate Structure Limited Liability Company Partnership Structures Equity Partnership or Minority Investment Employee Stock Ownership Plans Holding Company Choosing the Appropriate Acquisition Vehicle Choosing the Appropriate Postclosing Organization A Case in Point: Vivendi Universal and GE Combine Entertainment Assets to Form NBC UniversalChapter 3. Selecting the Form of Payment Form of Payment or Total Consideration Cash Payment Noncash Payment Cash and Stock in Combination Managing Risk and Closing the Gap on Price Postclosing Price Adjustments Earnouts and Other Contingent Payments Contingent Value Rights Distributed or Staged Payouts Rights, Royalties, and Fees Using Collar Arrangements to Preserve Shareholder Value Calculating Share Exchange Ratios A Case in Point: Boston Scientific Overcomes Johnson & Johnson to Acquire Guidant: A Lesson in Bidding StrategiesChapter 4. Selecting the Form of Acquisition Form of Acquisition Purchase of Assets Purchase of Stock Mergers Staged Transactions Acquisition Agreements Representations and Warranties Preclosing Covenants Closing Conditions Indemnification A Case in Point: Teva Pharmaceuticals Buys Barr Pharmaceuticals to Create a Global Generic Drugs PowerhouseChapter 5. Tax Structures and Strategies Taxable Transactions Taxable Purchase of Target Assets with Cash Taxable Purchase of Target Stock with Cash Section 338 Election Triangular Cash-Out Mergers Tax-Free Transactions Continuity of Interests and Continuity of Business Enterprise Requirements Alternative Tax-Free Reorganizations Expanding the Role of Mergers in Tax-Free Reorganizations Tax-Free Transactions Arising from 1031 “Like-Kind” Exchanges Other Tax Considerations Affecting Corporate Restructuring Activities Net Operating Losses Corporate Capital Gains Taxes Alternative Corporate Minimum Tax Greenmail Payments Morris Trust Transactions Leveraged Partnerships Legal Form of Selling Entity A Case in Point: "Grave Dancer" Takes Tribune Company Private in an Ill-Fated TransactionChapter 6. Accounting Considerations Limitations of Financial Data Generally Accepted Accounting Principles and International Accounting Standards Pro Forma Accounting Financial Reporting of Business Combinations SFAS 141R: The Revised Standards SFAS 157: The New Fair Value Framework Impact of Purchase Accounting on Financial Statements Balance Sheet Considerations Income Statement and Cash Flow Considerations International Accounting Standards Recapitalization Accounting A Case in Point: JDS Uniphase-SDL Merger Results in Huge Write-offChapter 7. Financing Structures and Strategies Why Financing Structures Matter Asset-Based or Secured Lending Security Provisions and Protective Covenants Cash Flow or Unsecured Lenders Types of Long-Term Financing Junk Bonds Leveraged Bank Loans The "Road Show" Financing Strategies: Borrowing Financing Strategies: Equity and Hybrid Securities Financing Strategies: Seller Financing Financing Strategies: Selling Discretionary Assets Highly Leveraged Transactions Common Forms of Leveraged Buyout Deal Structures Lender Commitment Letters Direct Merger Subsidiary Merger Reverse Stock Splits Legal Pitfalls of Improperly Structured LBOs Lender Due Diligence Leveraged Buyout Capital Structures Estimating the Impact of Alternative Financing Structures Selecting the Appropriate Capital or Financing Structure The Importance of Stating Assumptions A Case in Point: Financing LBOs—The SunGard TransactionChapter 8. The Role of Takeover Tactics and Defenses in the Negotiation Process Alternative Takeover Tactics in the Corporate Takeover Market The Friendly Approach The Aggressive Approach The Bear Hug: Limiting the Target's Options Proxy Contests in Support of a Takeover Pre-tender Offer Tactics: Purchasing Target Stock in the Open Market Using a Hostile Tender Offer to Circumvent the Target's Board Developing a Bidding or Takeover Strategy Alternative Takeover Defenses in the Corporate Takeover Market—Pre-offer and Post-offer Defenses Pre-offer Defenses Poison Pills Shark Repellents Post-offer Defenses Impact on Shareholder and Bondholder Value of Takeover Defenses A Case in Point: Mittal Acquires Arcelor in a Battle of Global TitansGlossaryReferencesIndex