Inhoudsopgave
Part 1: The M&A Environment....................................................................................................................... 4
Chapter 1: Introduction to M&A ........................................................................................................................ 4
Corporate Restructuring Process ................................................................................................................... 4
M&As as a form of Corporate Restructuring ................................................................................................. 4
Corporate Restructuring Terminology ........................................................................................................... 5
Diversification – does it create or destroy value? .......................................................................................... 6
Merger waves ................................................................................................................................................ 8
Why do M&A happen? ................................................................................................................................. 12
Chapter 1: introduction to M&As EMPIRICAL EVIDENCE ................................................................................. 17
Issues in empirical studies: ........................................................................................................................... 17
1. Event study methodology ........................................................................................................................ 17
2. Combined returns in M&As ...................................................................................................................... 19
3. Target returns in M&As ........................................................................................................................... 20
4. Bidder returns in M&As ............................................................................................................................ 21
5. Other aspects that play a role in the market reaction ............................................................................. 24
Chapter 3: Corporate ownership and governance around the world (1) ......................................................... 26
Current Lecture Learning Objectives ............................................................................................................ 26
Corporate Ownership around the World ..................................................................................................... 26
Governance Failure ...................................................................................................................................... 32
Alternative Models of Corporate Control ..................................................................................................... 36
Factors Affecting Corporate Governance: Market Model Perspective......................................................... 37
Chapter 3: Corporate governance and takeover defenses (2) ......................................................................... 37
Corporate governance ................................................................................................................................. 37
Factors effecting Corporate Governance: INTERNAL ................................................................................... 37
Factors effecting Corporate Governance: EXTERNAL ................................................................................... 42
Things to remember... .................................................................................................................................. 46
Part 2: The M&A Process ............................................................................................................................. 47
Chapter 4: Developing Business & Acquisition Plans........................................................................................ 47
Current learning objectives .......................................................................................................................... 47
Phase 1: Business plan ................................................................................................................................. 47
Phase 2: Acquisition plan (how to implement the acquisition ..................................................................... 50
Things to remember... .................................................................................................................................. 53
Chapter 5: Search through closing.................................................................................................................... 55
Learning objectives ...................................................................................................................................... 55
Phase 3: initiating the search ....................................................................................................................... 55
Phase 4: The screening process.................................................................................................................... 55
Phase 5: first contract à approach strategy .............................................................................................. 56
Phase 6: viewing negotiation as a process .................................................................................................. 57
Phase 7: developing the integration plan .................................................................................................... 59
Phase 8: closing............................................................................................................................................ 60
Phase 9: implementing post-closing integration ......................................................................................... 61
Phase 10: conducting post-closing evaluation ............................................................................................. 61
Things to remember: .................................................................................................................................... 62
Chapter 6: M&A Postclosing Integration .......................................................................................................... 63
Current Learning Objectives ......................................................................................................................... 63
Factors Affecting Successful Integration ...................................................................................................... 63
Viewing Integration as a Process = takes several years ............................................................................... 63
1. Integration planning ................................................................................................................................ 63
2. Developing Communication Plans............................................................................................................ 64
3. Creating a new organization .................................................................................................................... 64
1
, 4. Developing Staffing Plans ........................................................................................................................ 64
5. Functional Integration ............................................................................................................................. 65
6. Integrating Corporate Cultures ................................................................................................................ 65
Things to remember... .................................................................................................................................. 66
Part 3: M&A Valuation & Modeling ............................................................................................................ 67
Chapter 7: Cash Flow Valuation Basics ............................................................................................................. 67
Chapter 8: Relative Valuation Basics ................................................................................................................ 67
Chapter 10: Private Company Valuation .......................................................................................................... 67
Learning Objectives ...................................................................................................................................... 67
What is a Private Firm? ................................................................................................................................ 67
Family-owned firms ..................................................................................................................................... 68
Governance issues........................................................................................................................................ 68
Challenges of analyzing and valuing privately held firms ............................................................................ 72
Steps involved in valuing privately held businesses ..................................................................................... 73
Things to Remember… ................................................................................................................................. 83
Part 4: Deal Structuring and Financing Strategies........................................................................................ 84
Chapter 13: financing the deal (Private Equity, Hedge Funds, …) .................................................................... 84
Learning Objectives ...................................................................................................................................... 84
How are M&A Transactions Commonly Financed? ...................................................................................... 84
Empirical evidence ....................................................................................................................................... 89
Role of Private Equity and Hedge Funds in Deal Financing .......................................................................... 96
LBO – Leveraged Buyouts............................................................................................................................. 96
Part 5: Alternative Business and Restructuring .......................................................................................... 103
Chapter 15: Joint Ventures, Partnerships, Strategic Alliances, and Licensing ................................................ 103
Learning Objectives .................................................................................................................................... 103
Business Alliances as Alternatives to M&As............................................................................................... 103
Motivations for Forming Alliances ............................................................................................................. 104
Business Alliance Critical Success Factors .................................................................................................. 105
Creating NBC Universal in 2003 (example) ................................................................................................ 106
Comcast and General Electric Joint Venture (example 2) .......................................................................... 107
Legal Form Follows Business Strategy ....................................................................................................... 108
Alternative Legal Forms of Business Alliances ........................................................................................... 108
Alliance Deal Structuring Issues ................................................................................................................. 110
Empirical Studies of Business Alliances ...................................................................................................... 111
Things to Remember… ............................................................................................................................... 111
Chapter 16: Alternative Restructuring Strategies ........................................................................................... 112
Learning Objectives .................................................................................................................................... 112
Why do firms exit businesses? ................................................................................................................... 112
Divestitures ................................................................................................................................................ 114
Spin-Offs..................................................................................................................................................... 117
Equity Carve-outs ....................................................................................................................................... 119
Tracking Stocks .......................................................................................................................................... 121
Split-Offs .................................................................................................................................................... 121
Choosing Appropriate Restructuring Strategy: Viable Firms...................................................................... 123
Wealth Effect ............................................................................................................................................. 124
Things to Remember… ............................................................................................................................... 125
Guest Lectures .......................................................................................................................................... 126
Alantra – Wim Goossens ................................................................................................................................ 126
Ontex .............................................................................................................................................................. 131
2
, Course Layout: Mergers, Acquisitions, and
Other
Restructuring Activities
Part I: M&A Part II: M&A Process Part III: M&A Part IV: Deal Part V: Alternative
Environment Valuation and Structuring and Business and
Modeling Financing Restructuring
Strategies
Ch. 1: Motivations for Ch. 4: Business and Ch. 7: Discounted Ch. 11: Payment and Ch. 15: Business
M&A Acquisition Plans Cash Flow Valuation Legal Considerations Alliances
Ch. 2: Regulatory Ch. 5: Search through Ch. 8: Relative Ch. 12: Accounting & Ch. 16: Divestitures,
Considerations Closing Activities Valuation Tax Considerations Spin-Offs, Split-Offs,
Methodologies and Equity Carve-Outs
Ch. 3: Takeover Ch. 6: M&A Ch. 9: Financial Ch. 13: Financing the Ch. 17: Bankruptcy
Tactics, Defenses, and Postclosing Integration Modeling Basics Deal and Liquidation
Corporate Governance
Ch. 10: Private Ch. 14: Applying Ch. 18: Cross-Border
Company Valuation Financial Models to Transactions
Deal Structuring
3
, Part 1: The M&A Environment
Chapter 1: Introduction to M&A
Corporate Restructuring Process
Workforce
Reduction
Joint
Venture/Strategic
Alliance
Operational
Restructuring
Divestiture, Spin- Hostile Tender
Hostile Takeover
Off or Carve-Out Offer
Takeover or
Merger
Corporate Buyout
Restructuring
LBO/
Friendly Takeover Consolidation
MBO
Financial Reorganization Acquisition
Restructuring Liquidation
Stock Buyback
M&As as a form of Corporate Restructuring
Restructuring Activity Potential Strategy
- Corporate Restructuring - Redeploy Assets
ó Balance Sheet óMergers, Break-Ups, & Spin-Offs
ó Assets Only óAcquisitions, divestitures, etc.
- Financial Restructuring - Increase leverage to lower cost of
capital or as a takeover defense;
share repurchases
- Operational Restructuring - Divestitures, widespread employee
reduction, or reorganization
4
Part 1: The M&A Environment....................................................................................................................... 4
Chapter 1: Introduction to M&A ........................................................................................................................ 4
Corporate Restructuring Process ................................................................................................................... 4
M&As as a form of Corporate Restructuring ................................................................................................. 4
Corporate Restructuring Terminology ........................................................................................................... 5
Diversification – does it create or destroy value? .......................................................................................... 6
Merger waves ................................................................................................................................................ 8
Why do M&A happen? ................................................................................................................................. 12
Chapter 1: introduction to M&As EMPIRICAL EVIDENCE ................................................................................. 17
Issues in empirical studies: ........................................................................................................................... 17
1. Event study methodology ........................................................................................................................ 17
2. Combined returns in M&As ...................................................................................................................... 19
3. Target returns in M&As ........................................................................................................................... 20
4. Bidder returns in M&As ............................................................................................................................ 21
5. Other aspects that play a role in the market reaction ............................................................................. 24
Chapter 3: Corporate ownership and governance around the world (1) ......................................................... 26
Current Lecture Learning Objectives ............................................................................................................ 26
Corporate Ownership around the World ..................................................................................................... 26
Governance Failure ...................................................................................................................................... 32
Alternative Models of Corporate Control ..................................................................................................... 36
Factors Affecting Corporate Governance: Market Model Perspective......................................................... 37
Chapter 3: Corporate governance and takeover defenses (2) ......................................................................... 37
Corporate governance ................................................................................................................................. 37
Factors effecting Corporate Governance: INTERNAL ................................................................................... 37
Factors effecting Corporate Governance: EXTERNAL ................................................................................... 42
Things to remember... .................................................................................................................................. 46
Part 2: The M&A Process ............................................................................................................................. 47
Chapter 4: Developing Business & Acquisition Plans........................................................................................ 47
Current learning objectives .......................................................................................................................... 47
Phase 1: Business plan ................................................................................................................................. 47
Phase 2: Acquisition plan (how to implement the acquisition ..................................................................... 50
Things to remember... .................................................................................................................................. 53
Chapter 5: Search through closing.................................................................................................................... 55
Learning objectives ...................................................................................................................................... 55
Phase 3: initiating the search ....................................................................................................................... 55
Phase 4: The screening process.................................................................................................................... 55
Phase 5: first contract à approach strategy .............................................................................................. 56
Phase 6: viewing negotiation as a process .................................................................................................. 57
Phase 7: developing the integration plan .................................................................................................... 59
Phase 8: closing............................................................................................................................................ 60
Phase 9: implementing post-closing integration ......................................................................................... 61
Phase 10: conducting post-closing evaluation ............................................................................................. 61
Things to remember: .................................................................................................................................... 62
Chapter 6: M&A Postclosing Integration .......................................................................................................... 63
Current Learning Objectives ......................................................................................................................... 63
Factors Affecting Successful Integration ...................................................................................................... 63
Viewing Integration as a Process = takes several years ............................................................................... 63
1. Integration planning ................................................................................................................................ 63
2. Developing Communication Plans............................................................................................................ 64
3. Creating a new organization .................................................................................................................... 64
1
, 4. Developing Staffing Plans ........................................................................................................................ 64
5. Functional Integration ............................................................................................................................. 65
6. Integrating Corporate Cultures ................................................................................................................ 65
Things to remember... .................................................................................................................................. 66
Part 3: M&A Valuation & Modeling ............................................................................................................ 67
Chapter 7: Cash Flow Valuation Basics ............................................................................................................. 67
Chapter 8: Relative Valuation Basics ................................................................................................................ 67
Chapter 10: Private Company Valuation .......................................................................................................... 67
Learning Objectives ...................................................................................................................................... 67
What is a Private Firm? ................................................................................................................................ 67
Family-owned firms ..................................................................................................................................... 68
Governance issues........................................................................................................................................ 68
Challenges of analyzing and valuing privately held firms ............................................................................ 72
Steps involved in valuing privately held businesses ..................................................................................... 73
Things to Remember… ................................................................................................................................. 83
Part 4: Deal Structuring and Financing Strategies........................................................................................ 84
Chapter 13: financing the deal (Private Equity, Hedge Funds, …) .................................................................... 84
Learning Objectives ...................................................................................................................................... 84
How are M&A Transactions Commonly Financed? ...................................................................................... 84
Empirical evidence ....................................................................................................................................... 89
Role of Private Equity and Hedge Funds in Deal Financing .......................................................................... 96
LBO – Leveraged Buyouts............................................................................................................................. 96
Part 5: Alternative Business and Restructuring .......................................................................................... 103
Chapter 15: Joint Ventures, Partnerships, Strategic Alliances, and Licensing ................................................ 103
Learning Objectives .................................................................................................................................... 103
Business Alliances as Alternatives to M&As............................................................................................... 103
Motivations for Forming Alliances ............................................................................................................. 104
Business Alliance Critical Success Factors .................................................................................................. 105
Creating NBC Universal in 2003 (example) ................................................................................................ 106
Comcast and General Electric Joint Venture (example 2) .......................................................................... 107
Legal Form Follows Business Strategy ....................................................................................................... 108
Alternative Legal Forms of Business Alliances ........................................................................................... 108
Alliance Deal Structuring Issues ................................................................................................................. 110
Empirical Studies of Business Alliances ...................................................................................................... 111
Things to Remember… ............................................................................................................................... 111
Chapter 16: Alternative Restructuring Strategies ........................................................................................... 112
Learning Objectives .................................................................................................................................... 112
Why do firms exit businesses? ................................................................................................................... 112
Divestitures ................................................................................................................................................ 114
Spin-Offs..................................................................................................................................................... 117
Equity Carve-outs ....................................................................................................................................... 119
Tracking Stocks .......................................................................................................................................... 121
Split-Offs .................................................................................................................................................... 121
Choosing Appropriate Restructuring Strategy: Viable Firms...................................................................... 123
Wealth Effect ............................................................................................................................................. 124
Things to Remember… ............................................................................................................................... 125
Guest Lectures .......................................................................................................................................... 126
Alantra – Wim Goossens ................................................................................................................................ 126
Ontex .............................................................................................................................................................. 131
2
, Course Layout: Mergers, Acquisitions, and
Other
Restructuring Activities
Part I: M&A Part II: M&A Process Part III: M&A Part IV: Deal Part V: Alternative
Environment Valuation and Structuring and Business and
Modeling Financing Restructuring
Strategies
Ch. 1: Motivations for Ch. 4: Business and Ch. 7: Discounted Ch. 11: Payment and Ch. 15: Business
M&A Acquisition Plans Cash Flow Valuation Legal Considerations Alliances
Ch. 2: Regulatory Ch. 5: Search through Ch. 8: Relative Ch. 12: Accounting & Ch. 16: Divestitures,
Considerations Closing Activities Valuation Tax Considerations Spin-Offs, Split-Offs,
Methodologies and Equity Carve-Outs
Ch. 3: Takeover Ch. 6: M&A Ch. 9: Financial Ch. 13: Financing the Ch. 17: Bankruptcy
Tactics, Defenses, and Postclosing Integration Modeling Basics Deal and Liquidation
Corporate Governance
Ch. 10: Private Ch. 14: Applying Ch. 18: Cross-Border
Company Valuation Financial Models to Transactions
Deal Structuring
3
, Part 1: The M&A Environment
Chapter 1: Introduction to M&A
Corporate Restructuring Process
Workforce
Reduction
Joint
Venture/Strategic
Alliance
Operational
Restructuring
Divestiture, Spin- Hostile Tender
Hostile Takeover
Off or Carve-Out Offer
Takeover or
Merger
Corporate Buyout
Restructuring
LBO/
Friendly Takeover Consolidation
MBO
Financial Reorganization Acquisition
Restructuring Liquidation
Stock Buyback
M&As as a form of Corporate Restructuring
Restructuring Activity Potential Strategy
- Corporate Restructuring - Redeploy Assets
ó Balance Sheet óMergers, Break-Ups, & Spin-Offs
ó Assets Only óAcquisitions, divestitures, etc.
- Financial Restructuring - Increase leverage to lower cost of
capital or as a takeover defense;
share repurchases
- Operational Restructuring - Divestitures, widespread employee
reduction, or reorganization
4
