Mergers and Acquisitions Basics : The Key Steps of Acquisitions, Divestitures, and Investments PDF
Preview Mergers and Acquisitions Basics : The Key Steps of Acquisitions, Divestitures, and Investments
fm.qxd (00i-xii) 05/26/05 12:24 PM Page iii Mergers and Acquisitions Basics The Key Steps of Acquisitions, Divestitures, and Investments MICHAEL E. S. FRANKEL John Wiley & Sons, Inc. fm.qxd (00i-xii) 05/26/05 12:24 PM Page ii fm.qxd (00i-xii) 05/26/05 12:24 PM Page i Mergers and Acquisitions Basics fm.qxd (00i-xii) 05/26/05 12:24 PM Page ii fm.qxd (00i-xii) 05/26/05 12:24 PM Page iii Mergers and Acquisitions Basics The Key Steps of Acquisitions, Divestitures, and Investments MICHAEL E. S. FRANKEL John Wiley & Sons, Inc. fm.qxd (00i-xii) 05/26/05 12:24 PM Page iv This book is printed on acid-free paper. (cid:2)(cid:2) Copyright©2005 by John Wiley & Sons. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the web at www.copyright.com.Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services, or technical support, please contact our Customer Care Department within the United States at 800-762-2974, outside the United States at 317-572-3993 or fax 317-572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our Web site at www.wiley.com. Library ofCongress Cataloging-in-Publication Data: Frankel, Michael E. S. Mergers and acquisitions basics : the key steps of acquisitions, divestitures, and investments / Michael E. S. Frankel. p. cm. Includes index. ISBN-10: 0-471-67518-0 (cloth) ISBN-13: 978-0-471-67518-1 1. Consolidation and merger of corporations. 2. Corporations—Finance. I. Title. HG4028.M4F73 2005 658.1'6—dc22 2005002062 Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 fm.qxd (00i-xii) 05/26/05 12:24 PM Page v contents Preface ix Acknowledgments xi CHAPTER 1 Introduction 1 CHAPTER 2 The Players 7 The Buyer 7 The Seller 11 Investors/Owners 14 Corporate Staff 23 Advisors 31 Regulators 41 Others 44 CHAPTER 3 Decision to Buy or Sell 51 Reasons to Buy 52 Choosing to Sell 67 CHAPTER 4 Buyer’s Preparation for the Deal 83 Developing a Strategy 83 Building a Capability 87 Devising a Process 93 Planning the Message 101 CHAPTER 5 Seller’s Preparation for the Deal 105 Building a Capability 105 Making the Business Most Sellable: Cleaning It Up 108 Setting Expectations with Constituents 131 v fm.qxd (00i-xii) 05/26/05 12:24 PM Page vi vi CONTENTS CHAPTER 6 Deal Process 137 Determining the Universe of Buyers 138 Making the Approach 139 One-on-One Negotiation 141 Formal Auction 145 Informal Auction 149 Bankruptcy Auction 150 Direct versus Proxy 151 Relative Positions of Power 152 CHAPTER 7 Due Diligence 153 Building a Team 154 What the Buyer Wants to Know 166 CHAPTER 8 Valuation 191 Standard Valuation Methods 192 Pro Forma: Finding and Splitting the Upside 211 Getting the Valuation and Pro Forma Done 221 CHAPTER 9 Integration Planning 235 Dedicating Resources 236 Linking Due Diligence to Integration Planning and Execution 237 Key Integration Issues 238 CHAPTER 10 Financing Issues 251 Cost of Capital 251 Lost Opportunities 261 Financing Contingency: “Bird in the Hand” 262 CHAPTER 11 Closing the Deal and After 265 How Is a Deal Closed? 265 Other Signing and Closing Events 268 Postclosing Issues 272 Integration and Look Back (the Postmortem) 272 Appendix A Standard Form Deliverables During a Strategic Transaction Example 275 fm.qxd (00i-xii) 05/26/05 12:24 PM Page vii Contents vii Appendix B Due Diligence Report Table of Contents 277 Appendix C Standard Deal Process Checklist Example 279 Appendix D Standard Approval Process Example 281 Appendix E Approval of a Strategic Transaction: Key Topics in Presentation 283 Appendix F Generic Valuation Exercise 285 Appendix G Generic Acquisition Term Sheet for Acquisition by Public Buyer of Privately Held Target 287 Appendix H Generic Investment Term Sheet 293 Index 295 fm.qxd (00i-xii) 05/26/05 12:24 PM Page viii
Description:The list of books you might like
