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Material Adverse Change: Lessons from Failed M&As

ISBN: 978-1-118-06689-8
208 pages
February 2018
Material Adverse Change: Lessons from Failed M&As (1118066898) cover image

Description

Boost M&A outcomes with less risk by learning from mistakes of the past

Material Adverse Change will help you close more successful mergers and acquisitions by analyzing the common root causes of deal failures from before the Great Recession to today. The time between signing and closing a deal is a particularly risky period where the buyer has committed to purchase the company, but the seller continues to operate it while waiting for regulatory approval or funding to close out the deal. A Material Adverse Change clause allows the buyer to back out of the transaction if certain adverse events occur during this period. By designing this safety net into the contract, you’re free to take the time to examine records, meet with employees, and fully understand the legal issues at hand. If the target loses value during that time, in certain cases, you’re free to walk away. This book explores the full power of the Material Adverse Change clause, and today’s M&A in general. You’ll dig into the real causes of M&A failure, and discover the traits and practices that lead to poor results as you learn how to avoid these common mistakes and drive more successful deals. Recent case studies highlight common mistakes made—and propagated—by otherwise intelligent people, so you can identify and eliminate these practices within your own organization.

A large acquisition is already a delicate balancing act. Why complicate it with the exponential risk by not doing your homework? This book shows you how to apply best practices to increase your chances of successful deals and avoid potentially career ending mistakes. 

  • Explore the true root causes of M&A failures of the past
  • Analyze the personality traits that drive suboptimal outcomes
  • Implement new practices to avoid mistakes and close successful deals
  • Learn why common-sense errors are repeated over and over again
The M&A market has grown to become a major factor in the global economy, yet many buyers do less investigation than consumers making everyday purchases. Material Adverse Change shows you how to slash risk and improve your chances of completing better deals.
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Table of Contents

Introduction: The Risks and Opportunities of Doing a Deal

Chapter 1:  Why Bad Deals Happen

A Practical Approach to Mergers and Acquisitions

A Case Study:  RBS Buys ABN AMRO

Motivations for Deals

A Case Study:  Bank of America buys Merrill Lynch

Using M&A to Divert Attention

Using M&A to Grow Quickly

Using M&A to Solve Problems

Horizontal and Vertical Mergers

Conclusion

Chapter 2:  Buy or Build?

A Case Study: Commerce Bank

A Case Study: Metro Bank

Is There Anything in Between?

A Case Study: Dow Corning Joint Venture

A Case Study: Chizler Industries

Conclusion

Chapter 3:  Let the Buyer Beware

Wachovia Buys Golden West

AOL Time Warner Merger

Wells Fargo Buys Wachovia

Chapter 4:  The Opportunities and Risks of Expanding Your Business Globally

Telenor India Joint Venture

Telenor’s Global Strategy over Time

Telenor Expands into Eastern Europe

Telenor Pushes into Asia

The Telenor Unitech Joint Venture

Post Mortem on the Telenor Unitech Joint Venture

Lessons Learned

Trends for the Future

Chapter 5:  Culture is Critical

A Case Study from China

A Case Study from Japan

A Summary of Other Best Practices

Chapter 6: Who is Behind the Curtain?

Chapter 7:  Is it Too Late to Back Out?

Case Study One:  Bank of America Purchases Merrill Lynch

Case Study Two:  AT&T/T Mobile

Case Study Three:  Verizon Bids for Yahoo

Conclusion

Chapter 8:  How to Negotiate a Better Deal

Ten Best Practices for Effective Negotiation

Chapter 9:  Making it Right

Background

Be Strategic

Maintain a Rational Organizational Structure

Structure the Deal Properly

Recognize the Importance of Brand

Efficient Distribution

Beware of Culture

Have Financing Lined up in Advance

Establish an Appropriate M&A Approval Process

Integrate Early and Often

Clear Legal and Regulatory Process

Don’t Overpay

Continuous Learning

Chapter 10

Where do we go from here?

How Fast We Forget…..

Appendix A: Trinity International/American Public Media Group

Material Adverse Change Clause

Appendix B:  Bank of America/Merrill

Material Adverse Change Clause

Index

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