Mergers and Acquisitions: A Condensed Practitioner's Guide - Hardcover

Bragg, Steven M.

Hardcover

ISBN 10: 0470398949 ISBN 13: 9780470398944

Verlag: Wiley, 2008

Inhaltsangabe

Accounting expert Steven Bragg equips you with a working knowledge of the complete M&A process throughout Mergers and Acquisitions: A Condensed Practitioner's Guide, with comprehensive, reader-friendly, and straightforward advice on principal business terms, as well as the due diligence process, the customary contractual provisions, legal background, and how-to's applicable to business acquisitions. Destined to become a well-thumbed addition to every manager's library, this essential guide addresses the entire acquisition process with pragmatic information that will serve you as an excellent reference whether you are a novice or expert acquirer.

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Über die Autorin bzw. den Autor

Steven M. Bragg, CPA, CMA, CIA, CPIM, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and auditor at Deloitte & Touche. He received a master's degree in finance from Bentley College, an MBA from Babson College, and a bachelor's degree in economics from the University of Maine. He has been the two-time president of the Colorado Mountain Club, is an avid alpine skier and mountain biker, and is a certified master diver. Mr. Bragg resides in Centennial, Colorado. He is also the author of Accounting Best Practices and Accounting Policies and Procedures Manual (both published by Wiley).

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Praise for Mergers & Acquisitions
A Condensed Practitioner's Guide

"On a subject that encompasses so many possibilities, Steven Bragg's Mergers and Acquisitions is an excellent and comprehensive practical review of the myriad issues that can arise. Amidst the emotion of the M&A roller coaster that so many managers find themselves on in these fast-moving times, this guide provides an excellent and comprehensive aid for managers to ensure that the deal does not just get done but gets done effectively and efficiently. An invaluable addition to the armory of any manager considering or actually working on a merger or acquisition." ―James Dunning, founder and Managing Director, Geotrupes Consulting

"Mr. Bragg offers a unique combination of accounting expertise and insight into the merger and acquisition process. The comprehensive, yet practical, nature of the material obviously comes from having been in the trenches and participated as the Chief Financial Officer in both mergers and acquisitions. This is an excellent guide for the first-time acquirer as well as a tool for the experienced CFO to ensure a smooth and comprehensive process. Mr. Bragg has written an excellent reference book, which will be useful before and during your acquisition process." ―Richard V. Souders, President & CEO
Kaba Workforce Solutions

"Mergers and Acquisitions: A Condensed Practitioner's Guide is beyond any ready-reckoned reference book. The treatment of each topic by Mr. Bragg compiles a thought checklist against a mere action checklist for any practitioner. The term 'Condensed' in the title is a misnomer as the treatment is exhaustive and relevant!" ―K V Ramesh, Chairman & Managing Director
ECHC Management Services Private Limited, Chenna

"Successful transactions are a result of an enduring desire for two worlds to meet as one. This is a daunting task for all participants, and Steven Bragg identifies a road map of processes and procedures that anyone considering a divesture or entering the M&A space should call 'the handbook of M&A.' "
―Peter Cahill, Principal, Middle Market Investment Banking
TransCapital Partners, LLC

Aus dem Klappentext

Mergers & Acquisitions A Condensed Practitioner's Guide

Filled with immediately useful information in a condensed format on the mergers and acquisitions (M&A) process, Mergers and Acquisitions: A Condensed Practitioner's Guide equips you with a working knowledge of principal business terms, as well as the customary contractual provisions, legal background, and how-to's applicable to business acquisitions.

Accounting expert Steven Bragg throws light on the complete M&A process, with comprehensive, reader-friendly, and straightforward advice on:

• Why companies are interested in buying and selling businesses, the risks of doing so, and how to initiate and fend off a hostile acquisition attempt

• How to write a letter of intent and a purchase agreement

• The roles of the multitude of participants in the acquisition process

• Valuation and the broad range of valuation methodologies

• Term sheets and their use and contents

• The due diligence process

• All of the main components of the purchase agreement

• The acquisition integration process, covering the timing, planning, and implementation of an acquisition integration

• Identification and realization of synergies, communications processes, cultural issues, employee management, and numerous additional topics

• Use of purchase accounting, goodwill impairment testing, and push-down accounting

• Various legal forms of acquisitions, including their tax implications to both the buyer and seller

• Anti-trust and environmental restrictions and tax-free acquisition structures

Destined to become a well-thumbed addition to every manager's library, Mergers and Acquisitions: A Condensed Practitioner's Guide addresses the entire acquisition process with pragmatic information that will serve you as an excellent reference regardless of your M&A experience.

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Mergers & Acquisitions

A Condensed Practitioner's GuideBy Steven M. Bragg

John Wiley & Sons

Copyright © 2009 Steven M. Bragg
All right reserved.
ISBN: 978-0-470-39894-4

Chapter One

The Acquisition Process

An acquisition occurs when a buyer acquires all or part of the assets or business of a selling entity, and where both parties are actively assisting in the purchase transaction. If the buyer is doing so despite the active resistance of the other party, this is known as a hostile takeover. A merger occurs when two companies combine into one entity. The vast majority of all business combinations are handled as an acquisition, where one entity clearly takes over the operations of the other.

In this chapter, we will address the basics of the acquisition process-why buyers acquire, why sellers have an interest in selling, and the process flow for both a basic acquisition and one conducted through an auction process. The chapter also addresses a variety of other issues, including acquisition strategy, risks, target criteria, and hostile takeovers.

WHY WE ACQUIRE

Why do companies feel compelled to acquire other businesses? After all, the typical buyer knows its own market niche quite well, and can safely increase its revenues over time by continual, careful attention to internal organic growth. Nonetheless, thousands of acquisitions occur every year. Here are some reasons for doing so:

Business model. The target's business model may be different from that of the buyer, and so generates more profits. For example, a target may operate without labor unions, or have a substantially less burdensome benefits plan. The buyer may not be able to recreate this business model in-house without suffering significant unrest, but can readily buy into it through an acquisition.

Cyclicality reduction. A buyer may be trapped in a cyclical or seasonal industry, where profitability fluctuates on a recurring basis. It may deliberately acquire a company outside this industry with the goal of offsetting the business cycle to yield more consistent financial results.

Defensive. Some acquisitions take place because the buyer is itself the target of another company, and simply wants to make itself less attractive through an acquisition. This is particularly effective when the buyer already has a large market share, and buying another entity in the same market gives it such a large share that it cannot be bought by anyone else within the industry without anti-trust charges being brought.

Executive compensation. A buyer's management team may be in favor of an acquisition for the simple reason that a larger company generally pays higher salaries. The greater heft of the resulting organization is frequently viewed as being valid grounds for a significant pay boost among the surviving management team. This is not a good reason for an acquisition, but it is a common one.

Intellectual property. This is a defensible knowledge base that gives a company a competitive advantage, and is one of the best reasons to acquire a company. Intellectual property can include patents, trademarks, production processes, databases that are difficult to re-create, and research and development labs with a history of successful product development.

Internal development alternative. A company may have an extremely difficult time creating new products, and so looks else-where to find replacement products. This issue is especially likely to trigger an acquisition if a company has just decided to cancel an in-house development project, and needs a replacement immediately.

Local market expertise. In some industries, effective entry into a local market requires the gradual accumulation of reputation through a long process of building contacts and correct business practices. A company can follow this path through internal expansion, and gain success over a long period of time-or do it at once through an acquisition. Local market expertise is especially valuable in international situations, where a buyer has minimal knowledge of local customs, not to mention the inevitable obstacles posed by a different language.

Market growth. No matter how hard a buyer may push itself, it simply cannot grow revenues very fast in a slow-growth market, because there are so few sales to be made. Conversely, a target company may be situated in a market that is growing much faster than that of the buyer, so the buyer sees an avenue to more rapid growth.

Market share. Companies generally strive toward a high market share, because this generally allows them to enjoy a cost advantage over their competitors, who must spread their overhead costs over smaller production volumes. The acquisition of a large competitor is a reasonable way to quickly attain significant market share.

Production capacity. Though not a common acquisition justification, the buyer may have excess production capacity available, from which it can readily manufacture the target's products. Usually, tooling differences between the companies make this a difficult endeavor.

Products. The target may have an excellent product that the buyer can use to fill a hole in its own product line. This is an especially important reason when the market is expanding rapidly, and the buyer does not have sufficient time to develop the product internally before other competing products take over the market. Also, acquired products tend to have fewer bugs than ones just emerging from in-house development, since they have been through more field testing, and possibly through several build cycles. However, considerable additional effort may be needed to integrate the acquired products into the buyer's product line, so factor this issue into the purchase decision.

Regulatory environment. The buyer may be burdened by a suffocating regulatory environment, such as is imposed on utilities, airlines, and government contractors. If a target operates in an area subject to less regulation, the buyer may be more inclined to buy into that environment.

Sales channels. A target may have an unusually effective sales channel that the buyer thinks it can use to distribute its own products. Examples of such sales channels are as varied as door-to-door sales, electronic downloads, telemarketing, or a well-trained in-house sales staff. Also, the target's sales staff might be especially effective-in some industries, the sales department is considered the bottleneck operation, and so may be the prime reason for an acquisition offer.

Vertical integration. To use a military term, a company may want to "secure its supply lines" by acquiring selected suppliers. This is especially important if there is considerable demand for key supplies, and a supplier has control over a large proportion of them. This is especially important when other suppliers are located in politically volatile areas, leaving few reliable suppliers. In addition to this "backward integration," a company can also engage in "forward integration" by acquiring a distributor or customer. This most commonly occurs with distributors, especially if they have unusually excellent relationships with the ultimate set of customers. A company can also use its...

Details zur Ausgabe

• Verlag: Wiley
• Erscheinungsdatum: 2008
• Sprache: Englisch
• ISBN 10: 0470398949
• ISBN 13: 9780470398944
• Einband: Gebundene Ausgabe
• Auflage: 1
• Anzahl der Seiten: 320
• Kontakt zum Hersteller: Wiley-VCH GmbH; product_safety@wiley.com; ; Boschstrasse 12; Weinheim; 69469; Deutschland