Mergers and acquisitions from A to Z: strategic and practical guidance for small- and middle-market buyers and sellers

520 Pages·1998·1.75 MB·English

by  Andrew J. Sherman

Mergers and Acquisitions From A to Z :
title: Strategic and Practical Guidance for Small-
and Middle-market Buyers and Sellers
author: Sherman, Andrew J.
publisher: AMACOM Books
isbn10 | asin: 081440376X
print isbn13: 9780814403761
ebook isbn13: 9780585024103
language: English
Consolidation and merger of corporations,
subject
Small business--Mergers.
publication date: 1998
lcc: HD58.8.S484 1998eb
ddc: 658.1/6
Consolidation and merger of corporations,
subject:
Small business--Mergers.
MERGERS AND ACQUISITIONS FROM A
TO Z
MERGERS AND
ACQUISITIONS
FROM A TO Z
Strategic and Practical Guidance for
Small-and Middle-Market Buyers and Sellers
Andrew J. Sherman
AMACOM
American Management Association
New York · Atlanta · Boston · Chicago · Kansas City · San Francisco ·
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This book is available at a special discount when ordered in bulk
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For information, contact Special Sales Department, AMACOM, a
division of American Management Association, 1601 Broadway, New
York, NY 10019.
This publication is designed to provide accurate and authoritative
information in regard to the subject matter covered. It is sold with the
understanding that the publisher is not engaged in rendering legal,
accounting, or other professional service. If legal advice or other
expert assistance is required, the services of a competent professional
person should be sought.
Library of Congress Cataloging-in-Publicaton Data
Sherman, Andrew J.
Mergers and acquisitions from A to Z: strategic and practical
guidance for small-and middle-market buyers and sellers / Andrew J.
Sherman.
p. cm.
Includes index.
ISBN 0-8144-0376-X
1. Consolidation and merger of corporations. 2. Small business
Mergers. I. Title.
HD58.8.S484 1998
658.1'6dc21 97-52037
CIP
© 1998 Andrew Sherman.
All rights reserved.
Printed in the United States of America.
This publication may not be reproduced, stored in a retrieval system,
or transmitted in whole or in part, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise,
without the prior written permission of AMACOM, a division of
American Management Association, 1601 Broadway, New York, NY
10019.
Printing number
10 9 8 7 6 5 4 3 2 1
This book is dedicated to
Max and Susie Joffe
and
M. Gary Goldman
I thank them for their never-ending support.
Page vii
Contents
List of Exhibits ix
List of Boxed Materials xi
Acknowledgments xiii
Introduction 1
1.The Basics of Mergers and Acquisitions 7
2.Preparing for the Dance: The Seller's Perspective 14
3.Initiating the Deal: The Buyer's Perspective 27
4.The Letter of Intent and Other Preliminary Matters 40
5.Due Diligence 56
6.An Overview of Regulatory Considerations 78
7.Structuring the Deal 95
8.Valuation and Pricing of the Seller's Company 123
9.Financing the Acquisition 136
10. The Purchase Agreement and Related Legal 171
Documents
11.Postclosing Challenges 218
12.Alternatives to Mergers and Acquisitions 234
Index 263

Page ix
List of Exhibits
2-1. Sample Confidentiality Agreement 24
4-1. Sample Letter of Intent 51
5-1. Affidavit Regarding Liabilities 76
10-1. Model Indemnification Provisions 189
10-2. Sample Asset Purchase Agreement 191
Page xi
List of Boxed Materials
I-1. Ten Most Active M&A Industries by Dollar Value 4
I-2. Ten Most Active M&A Industries by Number of 5
Deals
1-1. Buyers and Sellers: Different Motivations 13
2-1. The Selling Process and Seller's Decisional Path 16
3-1. Buyer's Acquisition Process 37
4-1. Advantages and Disadvantages of Executing a 41
Letter of Intent
4-2. Common Reasons Why Deals Die at an Early 42
Stage
5-1. Common Mistakes Made by the Buyer During the 60
Due Diligence Investigation
5-2. Common Due Diligence Problems and Exposure 73
Areas
7-1. The Basic Alternative Structures 97
7-2. Taxable vs. Nontaxable Deals 103
7-3. Purchase vs. Pooling of Interests 105
7-4. The Five Basic Alternative Structures 106
7-5. Structuring the Offer to Meet the Needs of Both 122
Parties
8-1. Median P/E Paid in Acquisitions 126