Material Adverse Change: Lessons from Failed M&As
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 madeand propagatedby 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
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
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
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
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
Chapter 8: How to Negotiate a Better Deal
Ten Best Practices for Effective Negotiation
Chapter 9: Making it Right
Maintain a Rational Organizational Structure
Structure the Deal Properly
Recognize the Importance of Brand
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
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