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Mergers, Acquisitions, and Corporate Restructurings, 4th Edition

ISBN: 978-0-471-70564-2
648 pages
February 2007
Mergers, Acquisitions, and Corporate Restructurings, 4th Edition (0471705640) cover image
Modern restructuring techniques for a global business landscape


Corporate restructurings are an indispensable tool in building a new generation of re-engineered companies with the power and resources to compete on a global playing field. Written from a practical and historical perspective, Mergers, Acquisitions, and Corporate Restructurings, Fourth Edition carefully analyzes the strategies and motives that inspire M&As, the laws and rules that govern the field, as well as the offensive and defensive techniques of hostile acquisitions.

In this thoroughly revised Fourth Edition, author and business valuation expert Patrick Gaughan provides a fresh perspective on M&As in today's global business landscape, and how your company can reap the benefits from the various forms of restructurings available. Packed with the most up-to-date research, graphs, and case studies, Mergers, Acquisitions, and Corporate Restructurings, Fourth Edition explores:
* Recent takeover trends including the role of private equity firms and hedge funds
* Most effective offensive and defensive tactics in hostile bids
* A review of the effect of shareholder wealth on a variety of takeover actions
* Modern, historical, and global perspectives on the field
* The various forms of downsizing including divestitures, spinoffs, and equity carve-outs
* Bankruptcy as an effective restructuring technique
* Latest developments in corporate governance
* Pros and cons of joint ventures and strategic alliances
* Primary methods used to value public and private companies
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Preface.

About the Web Site.

Part 1 Background.

1 Introduction.

Recent M&A Trends.

Definitions.

Valuing a Transaction.

Types of Mergers.

Reasons for Mergers and Acquisitions.

Merger Financing.

Merger Professionals.

Merger Arbitrage.

Leveraged Buyouts and the Private Equity Market.

Corporate Restructuring.

Merger Negotiations.

Merger Approval Procedures.

Short-Form Merger.

Freezeouts and the Treatment of Minority Shareholders.

Purchase of Assets Compared with Purchase of Stock.

Structuring the Deal.

Assumption of the Seller’s Liabilities.

Advantages of Asset Acquisitions.

Asset Selloffs.

Reverse Mergers.

Holding Companies.

2 History of Mergers.

Merger Waves.

What Causes Merger Waves?

First Wave, 1897–1904.

Second Wave, 1916–1929.

The 1940s.

Third Wave, 1965–1969.

Trendsetting Mergers of the 1970s.

Fourth Wave, 1984–1989.

Fifth Wave.

Summary.

3 Legal Framework.

Laws Governing Mergers, Acquisitions, and Tender Offers.

Securities Laws.

Other Specific Takeover Rules in the United States.

International Securities Laws Relating to Takeovers.

Business Judgment Rule.

State Antitakeover Laws.

Regulation of Insider Trading.

Antitrust Laws.

Recent Trends in Antitrust Enforcement in the United States.

Measuring Concentration and Defining Market Share.

European Competition Policy.

Antitrust Remedies.

Summary.

4 Merger Strategy.

Growth.

Synergy.

Operating Synergy.

Diversification.

Other Economic Motives.

Hubris Hypothesis of Takeovers.

Other Motives.

Tax Motives.

Summary.

Part 2 Hostile Takeovers.

5 Antitakeover Measures.

Management Entrenchment Hypothesis versus Stockholder Interests Hypothesis.

Preventative Antitakeover Measures.

Changing the State of Incorporation.

Active Antitakeover Defenses.

Information Content of Takeover Resistance.

Summary.

6 Takeover Tactics.

Preliminary Takeover Steps.

Tender Offers.

Open Market Purchases and Street Sweeps.

Advantages of Tender Offers over Open Market Purchases.

Arbitrage and the Downward Price Pressures Around M&A Announcements.

Proxy Fights.

Summary.

Part 3 Going Private Transactions and Leveraged Buyouts.

7 Leveraged Buyouts.

Terminology.

Historical Trends in LBOs.

Costs of Being a Public Company.

Management Buyouts.

Conflicts of Interest in Management Buyouts.

Financing for Leveraged Buyouts.

Capital Structure of LBOs.

Sources of LBO Financing.

Returns to Stockholders from LBOs.

Returns to Stockholders from Divisional Buyouts.

Reverse LBOs.

Empirical Research on Wealth Transfer Effects.

Protection for Creditors.

Summary.

8 Trends in the Financing of Takeovers and Going Private Transactions.

Trends in Cash versus Stock Percentage of Takeover Financing.

Shareholder Wealth Effects and Methods of Payment.

Private Equity Market.

Hedge Funds.

Comparison of Private Equity Funds and Hedge Funds.

Hedge Fund and Private Equity Fund Convergence.

Junk Bonds Financing of Takeovers.

Stapled Financing.

Securitization and M&A Financing.

Summary.

9 Employee Stock Ownership Plans.

Historical Growth of ESOPs.

Types of Plans.

Characteristics of ESOPs.

Leveraged versus Unleveraged ESOPs.

Corporate Finance Uses of ESOPs.

Voting of ESOP Shares.

Cash Flow Implications.

Valuation of Stock Contributed into an ESOP.

Eligibility of ESOPs.

Put Options of ESOPs.

Dividends Paid.

ESOPs versus a Public Offering of Stock.

Employee Risk and ESOPs.

Securities Laws and ESOPs.

Tax Benefits of LESOPs.

Balance Sheet Effects of ESOPs.

Drawbacks of LESOPs.

ESOPs and Corporate Performance.

ESOPs as an Antitakeover Defense.

ESOPs and Shareholder Wealth.

ESOPs and LBOs.

Summary.

Part 4 Corporate Restructuring.

10 Corporate Restructuring.

Divestitures.

Divestiture and Spinoff Process.

Wealth Effects of Selloffs.

Equity Carve-outs.

Voluntary Liquidations, or Bustups.

Tracking Stocks.

Master Limited Partnerships and Selloffs.

Summary.

11 Restructuring in Bankruptcy.

Types of Business Failure.

Causes of Business Failure.

Bankruptcy Trends.

U.S. Bankruptcy Laws.

Reorganization versus Liquidation.

Reorganization Process.

Benefits of the Chapter 11 Process for the Debtor.

Company Size and Chapter 11 Benefits.

Prepackaged Bankruptcy.

Workouts.

Corporate Control and Default.

Liquidation.

Investing in the Securities of Distressed Companies.

Summary.

12 Corporate Governance.

Failed Corporate Governance: Accounting Scandals.

Sarbanes-Oxley Act.

Other Regulatory Changes.

Corporate Governance.

Summary.

13 Joint Ventures and Strategic Alliances.

Contractual Agreements.

Comparing Strategic Alliances and Joint Ventures with Mergers and Acquisitions.

Joint Ventures.

Governance of Strategic Alliances.

Summary.

14 Valuation.

Valuation Methods: Science or Art?

Managing Value as an Antitakeover Defense.

Benchmarks of Value.

How the Market Determines Discount Rates.

Valuation of the Target’s Equity.

Takeovers and Control Premiums.

Marketability of the Stock.

Valuation of Stock-for-Stock Exchanges.

Exchange Ratio.

Fixed Number of Shares versus Fixed Value.

International Takeovers and Stock-for-Stock Transactions.

Desirable Financial Characteristics of Targets.

Summary.

Appendix.

15 Tax Issues.

Financial Accounting.

Taxable versus Tax-Free Transactions.

Tax Consequences of a Stock-for-Stock Exchange.

Asset Basis Step-Up.

Changes in the Tax Laws.

Role of Taxes in the Merger Decision.

Taxes as a Source of Value in Management Buyouts.

Miscellaneous Tax Issues.

Summary.

Glossary.

Index.

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PATRICK A. GAUGHAN is President of Economatrix Research Associates, a Professor of Economics and Finance at the College of Business at Fairleigh Dickinson University, and the author of several books and articles in the field of mergers and acquisitions.
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  • Provides both practical and historical perspective of M&As and other corporate restructurings
  • Explains how each form of corporate restructuring works and the laws governing them
  • Provides numerous case studies examining mergers within the United States as well as internationally
  • Examines the financial analysis that both the acquiring and target companies must conduct prior to signing the deal
  • Incorporates updated research, graphs, and case studies on the private equity market, ethics, legal frameworks, and corporate governance.
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Updated Figures and Tables

Register here for updated Figures and Tables from the book.

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Instructors Resources
Wiley Instructor Companion Site
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