Background p. 1 Introduction p. 3 Definitions p. 7 Valuing a Transaction p. 7 Types of Mergers p. 7 Reasons for Mergers and Acquisitions p.

Transcription

1 Preface p. xi Background p. 1 Introduction p. 3 Definitions p. 7 Valuing a Transaction p. 7 Types of Mergers p. 7 Reasons for Mergers and Acquisitions p. 8 Merger Financing p. 8 Merger Professionals p. 9 Leveraged Buyouts p. 11 Corporate Restructuring p. 11 Merger Negotiations p. 12 Merger Approval Procedures p. 13 Short-Form Merger p. 15 Freezeouts and the Treatment of Minority Shareholders p. 15 Purchase of Assets Compared with Purchase of Stock p. 16 Assumption of the Seller's Liabilities p. 16 Advantages of Asset Acquisitions p. 16 Asset Selloffs p. 16 Reverse Mergers p. 17 Holding Companies p. 18 Joint Ventures p. 19 Strategic Alliances p. 21 References p. 22 History of Mergers p. 23 The First Wave, p. 23 The Second Wave, p. 28 The 1940s p. 32 The Third Wave, p. 32 Trendsetting Mergers of the 1970s p. 40 The Fourth Wave, p. 44 The Fifth Wave p. 51 Summary p. 54 References p. 55 Legal Framework p. 57 Overview p. 57 Laws Governing Mergers, Acquisitions, and Tender Offers p. 58 Securities Laws p. 58 Business Judgment Rule p. 80 Antitrust Laws p. 82 Antitrust Enforcement in the United States in the Fifth Merger Wave p. 92

2 Measuring Concentration and Defining Market Share p. 93 European Competition Policy p. 97 State Antitakeover Laws p. 97 Regulation of Insider Trading p. 104 A Company's Obligation to Disclose Merger Negotiations p. 107 Summary p. 108 References p. 109 Merger Strategy p. 111 Growth p. 111 Synergy p. 113 Diversification p. 123 Economic Motives p. 136 Hubris Hypothesis of Takeovers p. 147 Other Motives p. 151 Tax Motives p. 154 Summary p. 158 References p. 161 Hostile Takeovers p. 165 Antitakeover Measures p. 167 Management Entrenchment Hypothesis versus Stockholder Interests Hypothesis p. 168 Preventative Antitakeover Measures p. 169 Changing the State of Incorporation p. 196 Active Antitakeover Defenses p. 197 Information Content of Takeover Resistance p. 231 Summary p. 233 References p. 234 Takeover Tactics p. 238 Preliminary Takeover Steps p. 240 Tender Offers p. 244 Open Market Purchases and Street Sweeps p. 261 Advantages of Tender Offers over Open Market Purchases p. 263 Proxy Fights p. 265 Role of the Independent Election Corporation of America p. 274 Combination of a Proxy Fight and a Tender Offer p. 281 Proxy Fights and Takeovers in the 1990s p. 281 Summary p. 284 References p. 285 Leveraged Transactions p. 289 Leveraged Buyouts p. 291 Historical Trends in LBOs p. 291 Costs of Being a Public Company p. 294

3 Management Buyouts p. 295 Leveraged Buyout Process p. 298 Financing for Leveraged Buyouts p. 301 Capital Structure of Unsecured LBO Firms p. 306 Sources of LBO Financing p. 307 LBO Funds p. 308 LBO Firms p. 309 Financial Analysis of LBO Candidates p. 310 Returns to Stockholders from LBOs p. 311 Returns to Stockholders from Divisional Buyouts p. 312 Efficiency Gains from LBOs p. 312 Reverse LBOs p. 315 Conflicts of Interest in Management Buyouts p. 317 Empirical Research on Wealth Transfer Effects p. 321 Protection for Creditors p. 322 Summary p. 326 References p. 327 Junk Bonds p. 330 History p. 330 Investment Bankers and Junk Bond Financing p. 334 The Evolutionary Growth of the Junk Bond Market p. 337 Rating System for Bonds p. 342 Failed Acquisition Programs and Bond Ratings p. 346 Z Scores and Zeta Analysis: Credit Evaluation Alternative to Bond Ratings p. 346 Junk Bond Research p. 348 Junk Bond Returns: p. 357 Diversification of Junk Bond Investments p. 359 Risk of a Junk Bond Portfolio p. 359 Bank Loan Financing versus Junk Bond Financing p. 362 Junk Bonds and Greenmail p. 363 Regulations Affecting Junk Bond Financing p. 363 Summary p. 366 References p. 367 Employee Stock Ownership Plans p. 370 Historical Growth of ESOPs p. 370 Types of Plans p. 372 Characteristics of ESOPs p. 372 Leveraged versus Unleveraged ESOPs p. 373 Corporate Finance Uses of ESOPs p. 373 Voting of ESOP Shares p. 374 Cash Flow Implications p. 375

4 Valuation of Stock Contributed into an ESOP p. 375 Eligibility of ESOPs p. 376 Put Options of ESOPs p. 376 Dividends Paid p. 376 ESOPs versus a Public Offering of Stock p. 376 Employee Risk and ESOPs p. 378 Securities Laws and ESOPs p. 379 Tax Benefits of LESOPs p. 379 Balance Sheet Effects of ESOPs p. 380 Drawbacks of LESOPs p. 381 ESOPs and Corporate Performance p. 382 ESOPs as an Antitakeover Defense p. 385 ESOPs and Shareholder Wealth p. 385 ESOPs and LBOs p. 386 Summary p. 389 References p. 391 Corporate Restructuring p. 393 Corporate Restructuring p. 395 Divestitures p. 397 Divestiture and Spin-Off Process p. 403 Wealth Effects of Sell-Offs p. 409 Equity Carve-Outs p. 417 Voluntary Liquidations, or Bustups p. 421 Tracking Stocks p. 423 Master Limited Partnerships p. 424 Summary p. 426 References p. 427 Restructuring in Bankruptcy p. 430 Types of Business Failure p. 430 Causes of Business Failure p. 431 Bankruptcy Trends p. 433 Bankruptcy Laws p. 436 Reorganization versus Liquidation p. 437 Chapter 11 Reorganization Process p. 437 Benefits of the Chapter 11 Process for the Debtor p. 443 Company Size and Chapter 11 Benefits p. 443 Prepackaged Bankruptcy p. 445 Workouts p. 447 Corporate Control and Default p. 449 Liquidation p. 451 Investing in the Securities of Distressed Companies p. 453

5 Summary p. 458 References p. 459 Valuation for Mergers and Acquisitions p. 461 Financial Analysis p. 463 Hostile versus Friendly Deals: Access to Financial Data p. 464 Balance Sheet p. 465 Income Statement p. 470 Statement of Cash Flows p. 472 Analysis of Financial Statements and Computer Programs p. 474 Financial Ratio Analysis p. 475 Summary p. 491 References p. 491 Valuation of a Publicly Held Company p. 493 Valuation Methods: Science or Art? p. 495 Managing Value as an Antitakeover Defense p. 495 Stock Valuation Methods p. 495 Marketability of the Stock p. 500 Defining the Earnings Base p. 501 Forecating Methods p. 508 Financial Valuation Methodologies p. 513 Cost of Preferred Stock p. 518 Cost of Common Stock p. 518 How the Market Determines Discount Rates p. 520 Control Premium p. 520 Valuation of Stock-for-Stock Exchanges p. 530 Exchange Ratio p. 534 Fixed Number of Shares versus Fixed Value p. 542 International Takeovers and Stock-for-Stock Transactions p. 542 Benchmarks of Value p. 543 Desirable Financial Characteristics of Targets p. 544 Summary p. 545 References p. 546 Valuation of Privately Held Businesses p. 549 Differences in Valuation of Public and Private Businesses p. 550 Differences in Reporting of Income p. 552 Recasting the Income Statement: An Example of the Addback Process p. 554 Most Commonly Used Valuation Methods p. 557 Summary p. 576 References p. 577 Tax Issues p. 579 Financial Accounting p. 579

6 Taxable versus Tax-Free Transactions p. 580 Tax Consequences of a Stock-for-Stock Exchange p. 583 Asset Basis Step-Up p. 586 Changes in the Tax Laws p. 586 Role of Taxes in the Merger Decision p. 588 Taxes as a Source of Value in Management Buyouts p. 590 Miscellaneous Tax Issues p. 592 Summary p. 592 References p. 593 Glossary p. 595 Index p. 603 Table of Contents provided by Blackwell's Book Services and R.R. Bowker. Used with permission.