Mergers, Acquisitions, and Other Restructuring Activities, Third Edition

634 Pages·2005·2.85 MB·English

by  Donald DePamphilis

Mergers, Acquisitions, and Other Restructuring Activities

MERGERS,
ACQUISITIONS,
AND OTHER
RESTRUCTURING
ACTIVITIES
An Integrated Approach to Process, Tools,
Cases, and Solutions
Third Edition
Donald M. DePamphilis,
Ph.D.
College of Business Administration
Loyola Marymount University
Los Angeles, California
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I extend my heartfelt gratitude to my wife, Cheryl,
and my daughter, Cara, without whose patience and understanding
this book could not have been completed, and to
my brother, Mel, without whose encouragement this book
would never have been undertaken.
Praise for the First Edition
“This is one of the finest books I have seen on the subject, and surely the most
comprehensive. It’s a primer on all corporate finance activities, and anyone seeking an
educationonthemergersandacquisitionprocessandallofitsramificationsshouldread
this. As an active mergers and acquisitions practitioner myself, I want my dealmakers
and colleagues to read this, too.
The book covers not only the basics, but also the detailed, specific knowledge needed
by those individuals involved in almost every aspect of the mergers and acquisitions
process. This includes buyers, sellers, bankers, lawyers, and accountants. It happily
addresses not only the large public corporate transactions, but also the private middle
market companies where the vast majority of mergers and acquisitions deals take place.
While it certainly is a comprehensive textbook, I found it truly ‘easy reading’ and espe-
cially enjoyed the many case studies—some with the drama of the ‘Barbarians at the
Gate.’ Good stuff!”
—Marvin Kaulkin, CEO, Kaulkin Ginsberg Company
“Professor DePamphilis draws upon his years in academia and considerable industry
experience to produce a book that should be valuable reading for both the student and
practitioner of ‘deal making.’ I found it insightful and interesting.”
—D. Van Skilling, Retired Chairman and CEO, Experian Corporation
Contents
Preface to the Third Edition xiii
Acknowledgements xvii
About the Author xix
Business Case Studies xxi
PART I The Mergers and Acquisitions Environment 1
CHAPTER 1 Introduction to Mergers and Acquisitions 3
Overview 4
Building a CommonVocabulary 5
Participants inthe Mergers and Acquisitions Process 12
CommonMotivations for Mergers and Acquisitions 17
Historical Merger and AcquisitionWaves 24
Do Mergers and Acquisitions Pay Off for Shareholders? 24
Do Mergers and Acquisitions Pay Off for Bondholders? 31
Do Mergers and Acquisitions Pay Off for Society? 31
Why Do Mergers and Acquisitions OftenFail to MeetExpectations? 31
Things to Remember 34
Chapter DiscussionQuestions 35
References 42
CHAPTER 2 Regulatory Considerations 49
Overview 50
Federal Securities Laws 50
AntitrustLaws 55
State Regulations Affecting Mergers and Acquisitions 71
Regulated Industries 72
Environmental Laws 76
Labor and BenefitLaws 76
vii
viii Contents
Cross-Border Transactions 77
Things to Remember 78
Chapter DiscussionQuestions 78
References 83
CHAPTER 3 The Corporate Takeover Market: Common
Takeover Tactics, Antitakeover Defenses,
and Corporate Governance 85
Overview 86
Factors Affecting Corporate Governance 88
Alternative Takeover Tactics inthe Corporate Takeover Market 92
Developing a Bidding or Takeover Strategy DecisionTree 102
Alternative Takeover Defenses inthe Corporate Takeover Market:
Prebid and Postbid 105
Developing the Target’s Defensive Strategy 120
Things to Remember 121
Chapter DiscussionQuestions 122
References 128
PART II The Mergers and Acquisitions Process:
Phases 1–10 131
CHAPTER 4 Planning: Developing Business and Acquisition
Plans—Phases 1 and 2 of the Acquisition Process 133
Overview 133
A Planning-Based Approachto Mergers and Acquisitions 134
Phase 1: Building the Business Plan 136
The Business Planas a CommunicationDocument 157
Phase 2: Building the Merger/AcquisitionImplementationPlan 159
Things to Remember 165
Chapter DiscussionQuestions 166
Appendix A: CommonSources of Economic, Industry,
and MarketData 170
References 171
CHAPTER 5 Implementation: Search through Closing—
Phases 3–10 173
Overview 174
Phase 3: The SearchProcess 174
Phase 4: The Screening Process 178
Phase 5: FirstContact 179
Phase 6: Negotiation 182
Phase 7: Developing the IntegrationPlan 195
Phase 8: Closing 197
Phase 9: Implementing Postclosing Integration 201
Phase 10: Conducting a Postclosing Evaluation 203
Things to Remember 204
Chapter DiscussionQuestions 205