Book description
The ultimate guide to the ins and out of mergers and acquisitions
Practitioner's Complete Guide to M&As provides the practical tricks of the trade on M&As: what they need to know, what they have to know, and what they need to do. Numerous examples and forms are included illustrating concepts in discussion.
Written in a straight-talking style
A highly, practical application-oriented guide to mergers and acquisitions
Covers strategy development; deal flow and target identification; due diligence; valuation and offers; tax structuring; negotiation; and integration and value creation"
Presents information using bullet points rather than lengthy narrative for ease of reading
Numerous exhibits, forms, and examples are included
This practical guide takes you through every step of the M&A process, providing all the necessary tools that both the first-time M&A player as well as the seasoned practitioner need to complete a smart transaction.
Table of contents
- Cover
- Series
- Title Page
- Copyright
- Preface
- Acknowledgments
-
Topic 1: Strategy Development, Then M&A
- M&A IS ONE OF MANY BUSINESS DEVELOPMENT OPTIONS
- STAGES INVOLVED IN THE STRATEGIC PLANNING PROCESS
- STRATEGY DEVELOPMENT—WHERE AND HOW TO CREATE VALUE
- WHERE—IDENTIFY CUSTOMER'S INITIATIVES AND ATTRACTIVE MARKET SPACES
- HOW—IDENTIFY YOUR ACTIVITIES AND CAPABILITIES—EXTEND THEM
- HOW—IDENTIFY YOUR CAPABILITY GAPS VS. MARKET AND PRODUCT REQUIREMENTS
- HOW—IDENTIFY YOUR CAPABILITY GAPS VS. COMPETITION
- HOW—DEFINE ATTRACTIVE MARKET CRITERIA, RATE MARKETS, CLOSE GAPS
- HOW—IF M&A IS VEHICLE TO CLOSE GAPS, IDENTIFY TARGETS
- Topic 2: M&A Process: Front to Back
- Topic 3: Why M&A?
- Topic 4: Deal Criteria
- Topic 5: Deal Sourcing
- Topic 6: Fees for Services
- Topic 7: Financial and Strategic Buyers
- Topic 8: How Long Will It Take to Complete the Deal?
- Topic 9: Confidentiality Agreements
-
Topic 10: “Concern Capture” Due Diligence
- DESCRIPTION OF THE DUE DILIGENCE PROCESS
- PHASE ONE: PRELIMINARY DILIGENCE
- PHASE TWO: DETAIL DUE DILIGENCE
- IDENTIFY NON-NORMATIVE TRENDS AND BEHAVIOR
- BUSINESS DRIVER ASSESSMENT ENGINE—DETERMINE STRENGTH OF INCOME DRIVERS
- VALUATION DRIVER ASSESSMENT ENGINE-DETERMINE STRENGTH OF VALUATION DRIVERS
- CONCLUSION
- Topic 11: Keep Deal Conversations Quiet
-
Topic 12: Auctions
- FEAR IS A COMPELLING DRIVER TO AUCTION SUCCESS
- AUCTION PROCESS—BID SOLICITATION
- AUCTION PROCESS—INVITATION TO BID
- AUCTION PROCESS—FIRST ROUND CONDITIONAL OFFER
- AUCTION PROCESS—MANAGEMENT PRESENTATION, DUE DILIGENCE, MORE BID ROUNDS
- AUCTION PROCESS—SELECT A WINNER
- PREEMPTIVE OFFERS
- AUCTION PROCESS—GRANT EXCLUSIVITY
- FAILED AUCTIONS
- AN AUCTION BIDDING STRATEGY
- BEWARE OF THE CRAZIES
- Topic 13: Seller's Prospectus
- Topic 14: Pay for Inherent Capabilities Only
- Topic 15: Platform Value
- Topic 16: Buyer and Seller Value Perspectives
- Topic 17: Integration Initiatives Will Determine Deal Value
- Topic 18: Unlock Hidden Value: The Lean Enterprise
- Topic 19: The Real Deal: Lean
- Topic 20: Valuation: An Introduction
- Topic 21: Discounted Cash Flow: An Introduction
- Topic 22: Free Cash Flow
-
Topic 23: Fair Return on a Deal
- FAIR RETURN
- CAPITAL ASSET PRICING MODEL
- SECURITY MARKET LINE
- COSTS OF CAPITAL DEFINED AND USES: CU, CL, I, AND C*
- VALUATION RISKS
- OTHER METHODS OF RETURN ON EQUITY ESTIMATION
- CAPM CALCULATION
- TREATMENT OF INHERENT VOLATILITY FROM UNSYSTEMATIC RISK IN VALUATIONS
- INTERNATIONAL COST OF EQUITY CAPITAL—OVERVIEW
- Topic 24: Risk-Free Rates
- Topic 25: Equity Risk Premiums
- Topic 26: What Is Business Risk?
- Topic 27: Entropy: Tendency toward Negative Variation
- Topic 28: Equity Investor Risk
- Topic 29: Beta
- Topic 30: Systematic Risk
- Topic 31: Unsystematic Risk
- Topic 32: Beta with or without Debt
- Topic 33: Beta: Levered or Unlevered
- Topic 34: Beta Application in Determination of CU
- Topic 35: Levered Beta Moves as Debt to Equity Moves
- Topic 36: Size Premium
- Topic 37: Weighted Average Cost of Capital
-
Topic 38: Terminal Values, Terminal Value Multiples, and Terminal Value DCFs
- TERMINAL VALUE DEFINITION
- OVERSTATING TERMINAL VALUES IS A DEAL VALUATION RISK
- TERMINAL VALUE DETERMINATION METHODS
- PERPETUITY GROWTH CAPITALIZATION METHOD
- DISCOUNTED FREE CASH FLOW INTO PERPETUITY METHOD
- DISCOUNTING THE TERMINAL VALUE AMOUNT AT THE END OF YEAR T
- LIQUIDATION OF ASSETS TERMINAL VALUE METHOD
- Topic 39: Discounted Cash Flow Valuation Illustrated
- Topic 40: Leverage: The Real Deal
- Topic 41: Debt Limits
- Topic 42: Debt Adds Value: The Derivation of Dt
- Topic 43: The Leveraged Buyout; Definition and Valuation
- Topic 44: Valuing the Leveraged Buyout
- Topic 45: Real Option Valuation: An Introduction
-
Topic 46: Real Option Valuation: Application and Illustration
- OVERVIEW
- REAL OPTION VALUATION: AN EXAMPLE
- NPV APPROACH
- ILLUSTRATION OF ELEMENTS OF REAL OPTION APPROACH
- INTERPRETATION OF THE REAL OPTION RESULT
- USING THE MODIFIED BLACK-SCHOLES REAL OPTION MODEL
- REVIEW THE TOLLING ARRANGEMENT AND OPTION VALUE AT THE END OF THE FIRST YEAR: IF LOWER VOLATILITY IS EXPECTED
- REVIEW THE TOLLING ARRANGEMENT AND OPTION VALUE AT THE END OF THE FIRST YEAR: IF HIGHER VOLATILITY IS EXPECTED
- CONCLUDING REMARKS ON REAL OPTION VALUATION
- Topic 47: M&A Values Are Not All the Same
- Topic 48: Discounts and Premiums
- Topic 49: Discounted Cash Flow Valuations: Minority or Control
- Topic 50: Inflation in DCF Valuations
- Topic 51: Integration, Alignment, and Synergy Benefits: Plan It Out
-
Topic 52: Integration, Alignment, and Valuing Synergy Benefits
- INTRODUCTION-INTEGRATION PLANNING, SYNERGY EVALUATION
- KEY SUBJECT AREAS REQUIRING ATTENTION
- STRATEGY ALIGNMENT, DEVELOPMENT, AND BUY-IN
- ORGANIZATIONAL DESIGN, MANAGEMENT, CULTURE, AND POLICY
- COMMUNICATION
- CAPACITY, R&D PROJECT, AND FACILITY SELECTION DESIGN
- OTHER FACILITY SYNERGY DESIGN
- BUSINESS AND SUPPORT FUNCTION SYNERGY DESIGN
- MARKET, CUSTOMER-BASED SYNERGIES
- TECHNOLOGY, INTELLECTUAL PROPERTY, AND R&D
- INFORMATION TECHNOLOGY
- Topic 53: Venture Capital Valuation
- Topic 54: Discount Rates and Valuing Free Cash Flow
- Topic 55: Growth, C*, and Return: The Engine to Increased Valuations and Deferred Tax Advantage
- Topic 56: How Fast Can the Target Grow?
-
Topic 57: Cash Flow Multiples, Growth Rates, and Discount Rates
- LAGGING FREE CASH FLOW MULTIPLES, END-OF-YEAR BASIS, NO GROWTH
- LAGGING FREE CASH FLOW MULTIPLES, MIDYEAR BASIS, NO GROWTH
- FACTOR TO CONVERT END-OF-YEAR BASIS MULTIPLES TO MIDYEAR'S BASIS
- LAGGING FREE CASH FLOW MULTIPLES, END-OF-YEAR BASIS, WITH GROWTH
- DISCOUNTED RATE ADJUSTED GROWTH RATE METHOD TO DETERMINE FCFM
- DERIVATION OF GD IN THE DISCOUNTED RATE ADJUSTED GROWTH RATE METHOD
- METHOD FOR DETERMINING AN APPROXIMATION OF GD AND FCFM
- IMPACT OF NOT USING GD IN FCFM MULTIPLE CONSTRUCTION
- DERIVE FCFM, C*, OR GD FROM EITHER OF THE OTHER TWO TERMS
- SPIDER CHART METHOD FOR VISUAL EXPLANATION OF THE CONSTRUCTION OF C* AND FCFM
- DERIVATION OF PRICE EARNINGS AND OTHER MULTIPLES FROM FCFM
- Topic 58: Comparable Multiples
-
Topic 59: Converting FCFM to P/Es and Other Valuation Multiples and Deriving Slot Multiples for Public Companies
- UNDERSTAND THE SUSTAINABLE RELATIONSHIPS BETWEEN FCF AND OTHER EARNINGS FUNDAMENTALS
- DERIVATION FORMULA TO CONVERT FROM FCFM TO OTHER VALUATION MULTIPLES AND VICE VERSA
- VISUAL CONVERSION OF FCFM TO EBITDAM
- USE THE P/E EVISCERATOR TO VALIDATE P/E TRADING MULTIPLES OF PUBLIC COMPANIES
- P/E EVISCERATOR APPLIED TO THE ILLUSTRATION IN TOPIC 60
- P/E EVISCERATOR APPLIED TO COCA-COLA COMPANY AS OF OCTOBER 31, 2007
- IMPLICIT PE, FCFM VERSUS DERIVED SLOT P/E, FCFM, AND GD
- VARIANCE IN SLOT RESULTS IF ASSUMPTIONS ARE SENSITIZED
- CONCLUSION ON KO P/E
- THE VALUE-CREATION POTENTIAL INDEX FOR KO
- P/E EVISCERATOR APPLIED TO GOOGLE INC. AS OF NOVEMBER 1, 2007
- IMPLICIT P/E, FCFM VERSUS DERIVED SLOT P/E, FCFM, AND GD
- VARIANCE IN SLOT RESULTS IF ASSUMPTIONS ARE SENSITIZED
- CONCLUSION ON GOOG P/E
- THE VALUE CREATION STRENGTH INDEX FOR GOOG
- CONCLUSION: P/E EVISCERATOR
- GRAPHS OF APPROXIMATE SMALL- AND LARGE-COMPANY FREE CASH FLOW AND EBITDA MULTIPLES OVER A RANGE OF GROWTH
-
Topic 60: EBITDA Valuation Engine
- EBITDA ENGINE OVERVIEW—A SHORTHAND VALUATION METHOD
- EBITDA ENGINE EXPLAINED
- VALUE OF GROWTH DURING T
- EBITDA ENGINE VALUATION EXAMPLE
- COMPARISON OF EBITDA ENGINE VALUATION RESULTS WITH OTHER METHODS
- SPIDER CHART PRESENTATION OF THE EBITDA ENGINE ILLUSTRATION OF APPENDIX 60.2
- A FINAL NOTE ON VALUATIONS
- Topic 61: Free Cash Flow Equivalent Impacts for Arbitrary Adjustments to Discount Rates
-
Topic 62: Transferring Defined Benefit Pension Plan Liability Issues
- INTRODUCTION
- BUYER'S VALUATION OF PENSION LIABILITY
- PROJECTED BENEFIT OBLIGATION BASIS FOR LIABILITY VALUATION
- ACCUMULATED BENEFIT OBLIGATION BASIS FOR LIABILITY VALUATION
- PROJECTED TERMINATION BASIS FOR LIABILITY VALUATION
- SELLER'S VALUATION OF PENSION LIABILITY
- GOING-CONCERN BASIS FOR LIABILITY VALUATION
- NEGOTIATED VALUATION OF PENSION LIABILITY
- PENSION ASSET TRANSFER ISSUES
- BENEFIT TRANSFER ISSUES
- Topic 63: Environmental Remediation Expenses
- Topic 64: Environmental Insurance
- Topic 65: Management Warrant Incentive Plans
- Topic 66: Negotiation: Introduction and Overview
- Topic 67: Negotiation: Values, Offers, Prices, and Risk Assumption
- Topic 68: Negotiation: Offer Content
- Topic 69: Negotiation: Create Space in Your Ideas
- Topic 70: Negotiation: Beware of the Emotions of Private Sellers
- Topic 71: Negotiation: Imprint; Do Not Lecture
- Topic 72: Negotiation: Handling Tight Spots
- Topic 73: Negotiation: Closing the Bid-Ask Negotiating Gap
- Topic 74: Negotiation: Be Aware of Leverage and Deal Momentum Shift
- Topic 75: Negotiation in the Final Stages
- Topic 76: Negotiation: Use Earn-Outs or Noncompete Agreements to Close a Bid-Ask Gap
- Topic 77: Negotiation: After the Deal Is Agreed
- Topic 78: Negotiation: Bluffing and How to Handle It
- Topic 79: Negotiation: When Do You Step Away?
- Topic 80: Negotiation: When Do You Proceed?
- Topic 81: Negotiation: Do a Time Capsule
- Topic 82: Negotiation: Build Trust to Get Closed
- Topic 83: Exits under Duress: Have a Plan if the Deal Does Not Work
- Topic 84: Structuring the Deal: An Overview
- Topic 85: Structuring the Deal: Asset Step-Ups, Noncompete, and Synergy Valuation Engines
- Topic 86: Total Shareholder Return
- Topic 87: Stakeholder Value Creation
- Topic 88: EVAquity: Align Shareholder and Management Interests
- Topic 89: Letter of Intent
- Topic 90: Purchase and Sale Agreement
-
Topic 91: Purchase and Sale Agreement: Explanation by Section
- PARTIES, DEFINITIONS, PURCHASE, AND SALE
- PURCHASE PRICE AND ADJUSTMENTS, COVENANTS PRIOR TO CLOSING
- REPRESENTATIONS AND WARRANTIES OF THE SELLER, INTRODUCTION
- REPRESENTATIONS AND WARRANTIES OF THE SELLER
- REPRESENTATIONS AND WARRANTIES OF THE BUYER
- CONDITIONS TO CLOSING, CLOSING AND DELIVERIES AT THE CLOSING
- POSTCLOSING COVENANTS, INDEMNIFICATION, SURVIVAL OF REPRESENTATIONS, AND WARRANTIES
- INDEMNIFICATION PROCEDURE
- OTHER PROVISIONS
- Topic 92: Purchase Price Adjustments for Working Capital
- Topic 93: Indemnification and Survival Provisions
- Topic 94: Escrows
- Topic 95: Joint Venture Transaction: Valuation and Structuring Overview
- Topic 96: Why Deals Go Bad
- Topic 97: After the Deal: Do a Deal Bible
- Topic 98: Do the Audits of the Integration and Deal Value Creation Plan
- About the Web Site
- Index
Product information
- Title: Practitioner's Complete Guide to M&As: An All-Inclusive Reference, with Website
- Author(s):
- Release date: April 2011
- Publisher(s): Wiley
- ISBN: 9780470920442
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