Mergers and Acquisitions from A to Z

Mergers and acquisitions represent a successful growth strategy for many companies, but, while potentially profitable, M&A transactions are complex and often risky. Covering the latest trends, developments, and best practices for the post-Madoff era, this comprehensive, hands-on resource walks readers through every step of the process, offering practical advice for keeping deals on track and ensuring postclosing integration success. Filled with case studies and war stories illustrating what works and why, the third edition of "Mergers and Acquisitions from A to Z" offers valuable tools, checklists, and sample documents, providing crucial guidance on: preparing for and initiating the deal; regulatory considerations; due diligence; deal structure; valuation and pricing; and financing even during turbulent market conditions. M&A transactions can quickly spell a company's doom if they are not conceived and executed carefully, legally, and sensibly. This is the classic guide to mergers and acquisitions, now completely updated for today's market. CONTENTS......Page 6 ACKNOWLEDGMENTS......Page 10 INTRODUCTION TO THE THIRD EDITION......Page 12 Understanding Key Terms......Page 20 What’s All the Fuss About?......Page 22 Why Bad Deals Happen to Good People......Page 27 Why Do Buyers Buy, and Why Do Sellers Sell?......Page 28 CHAPTER 2 Preparing for the Dance: The Seller’s Perspective......Page 32 Preparing for the Sale of the Company......Page 36 Common Preparation Mistakes......Page 48 Other Considerations for the Seller......Page 50 Assembling the Team......Page 53 Developing an Acquisition Plan......Page 54 Applying the Criteria: How to Narrow the Field......Page 62 Approaching a Company That Is Not for Sale......Page 63 Dealing with the Seller’s Management Team......Page 64 Directory of M&A Resources for Prospective Buyers (and Sellers)......Page 65 CHAPTER 4 The Letter of Intent and Other Preliminary Matters......Page 68 Binding Terms......Page 71 Common Reasons Why Deals Die at an Early Stage......Page 78 Preparation of the Work Schedule......Page 79 Another Predeal Task: The Growing Debate About the Role and Usefulness of Fairness Opinions......Page 80 CHAPTER 5 Due Diligence......Page 84 Best Practices in Due Diligence in the Era of Accountability 2.0......Page 85 Legal Due Diligence......Page 93 Business and Strategic Due Diligence......Page 102 Conclusion......Page 110 Appendix to Chapter 5: Post-Sarbanes-Oxley Due Diligence Checklist......Page 111 The Disclosure Requirements......Page 112 Checklist of Items Post-Sarbox......Page 116 Introduction......Page 120 Environmental Laws......Page 121 Federal Securities Laws......Page 122 Federal Antitrust Laws......Page 125 Waiting Periods......Page 128 Labor and Employment Law......Page 132 CHAPTER 7 Structuring the Deal......Page 139 Stock vs. Asset Purchases......Page 141 Tax and Accounting Issues Affecting the Structure of the Transaction......Page 145 One-Step vs. Staged Transactions......Page 149 Method of Payment......Page 151 Nontraditional Structures and Strategies......Page 154 CHAPTER 8 Valuation and Pricing of the Seller’s Company......Page 163 A Quick Introduction to Pricing......Page 165 Valuation Overview......Page 166 CHAPTER 9 Financing the Acquisition......Page 174 An Overview of Financing Sources......Page 175 Understanding the Lender’s Perspective......Page 178 Financing Deals in Times of Turmoil......Page 179 Steps in the Loan Process......Page 183 Equity Financing......Page 187 CHAPTER 10 The Purchase Agreement and Related Legal Documents......Page 208 Case Study: GCC Acquires TCI......Page 210 Sample Schedule of Documents to Be Exchanged at a Typical Closing......Page 228 CHAPTER 11 Keeping M&A Deals on Track: Managing the Deal Killers......Page 271 Communication and Leadership......Page 272 Understanding the Types of Deal Killers......Page 273 Curing the Transactional Patient......Page 275 Maintaining Order in the M&A Process: Simple Principles for Keeping Deals on Track......Page 276 Conclusion......Page 277 CHAPTER 12 Postclosing Challenges......Page 278 A Time of Transition......Page 279 Staffing Levels and Related Human Resources Challenges......Page 283 Customers......Page 286 Physical Facilities......Page 287 Problems Involving Attitudes and Corporate Culture......Page 288 Benefit and Compensation Plans......Page 290 Legal Issues......Page 291 Minimizing the Barriers to the Transition......Page 292 Postmerger Integration Key Lessons and Best Practices......Page 296 Conclusion......Page 299 CHAPTER 13 Alternatives to Mergers and Acquisitions......Page 300 Growth Strategy Alternative 1: Joint Ventures......Page 301 Growth Strategy Alternative 2: Franchising......Page 306 Growth Strategy Alternative 3: Technology and Merchandise Licensing......Page 318 Growth Strategy Alternative 4: Distributorships and Dealerships......Page 325 B......Page 328 C......Page 329 E......Page 330 H......Page 331 L......Page 332 P......Page 333 R......Page 334 S......Page 335 U......Page 336 Y......Page 337

M&A transactions can quickly spell a company’s doom if they aren’t conceived and executed carefully, legally, and sensibly. This classic, comprehensive guide to mergers and acquisitions—now completely updated for today’s market—provides you with a thorough understanding of the latest trends and developments in M&A best practices. Packed with essential tools, checklists, sample forms, and insights, this is the one guide you need to clearly take you through the entire process of any merger or acquisition.

Advance Praise for Mergers & Acquisitions from A to Z:

“Andrew J. Sherman’s Mergers & Acquisitions from A to Z is a thorough update of the prior two editions, and considers the many ways M&A has been affected by the current economic environment. I found his book to be very well written, clear, concise, and quite complete. He provides great checklists and excellent sample documents to help walk the buyer, seller, and their advisors through the steps in putting together the right deal to make sure it’s a win/win for both the buyer and seller. Importantly, Sherman addresses the many M&A teams critical to a successful transaction and the vital role each plays. He clearly illustrates why no one should go it alone without proper professional support, documenting primary issues which can arise during due diligence, any of which could kill the deal. All together, I found Sherman’s book to be an excellent resource, an eye-opener, useful for M&A professionals at all experience levels, and highly recommend this read.” — Parnell Black, MBA, CPA, CVA, NACVA’s Chief Executive Officer

“As prolific a writer as Andrew Sherman is, he always substantially contributes to and enhances the M&A literature and canon when he picks up his pen. This is a must-read for anyone contemplating an M&A transaction or advising on one.” — Dennis J. Roberts, Chairman, The Middle Market Investment Banking Association and author of An Insider’s Guide to the Purchase and Sale of Middle Market Business Interests

“A comprehensive, straightforward, authoritative, and surprisingly reader-friendly how-and-whether-to-do-it handbook on acquiring, selling, and merging companies. It includes everything you need to know. It contains all the questions to ask, the factors to consider in deciding whether and when to buy or sell and how to weigh them, the checklists to create, and the pitfalls to guard against. The absence of unnecessary jargon is as refreshing as the material is enlightening.”— Joel L. Fleishman, Professor of Law and Public Policy, Terry Sanford Institute of Public Policy, Duke University

“This is a very useful book for the corporate, small business, or start-up manager who must quickly come up to speed on what’s involved in acquiring another company or being acquired.”— John Taylor, Senior Vice President, National Venture Capital Association

"The power your company can generate in concert with another is immense. But mergers and acquisitions are incredibly complicated, involving issues ranging from valuation and deal structure to tax and securities laws. And things have only gotten more complicated in the increasingly global, post-Madoff era." "A comprehensive, hands-on resource--now fully revised and updated--the third edition of Mergers and Acquisitions from A to Z shows you how to get M & A deals done right." "Containing valuable tools, checklists, and sample documents, the book spells out the latest trends and developments in middle-market M & A best practices, and walks you through every step of the deal, from preliminary considerations to due diligence, through each and every piece of necessary documentation, all the way to closing" "The book explains key market conditions and trends, how to understand and take into consideration the motivations of each party, and ways to evaluate possible alternative paths to achieving growth goals and objectives." "Written in an easy-to-read, easy-to-understand, nontechnical voice, and presenting creative strategies for structuring and financing M & A transactions during turbulent market conditions, this long-trusted guide reveals how to boost both the immediate financial position and the long-term outlook for your organization." "Illustrating what works and why with case studies and war stories, the book brings you up to speed on the essential steps and guidelines behind well-executed M & A transactions. Whether you're a novice or a veteran to the complex world of mergers and acquisitions, this book ensures that you have a thorough understanding of the latest key economic trends and market conditions that may affect your deal ... and gives you the assuance you need to get the deal done smoothly and ensure post-transaction success."--Jacket "The power your company can generate in concert with another is immense. But mergers and acquisitions are incredibly complicated, involving issues ranging from valuation and deal structure to tax and securities laws. And things have only gotten more complicated in the increasingly global, post-Madoff era." "A comprehensive, hands-on resource--now fully revised and updated--the third edition of Mergers and Acquisitions from A to Z shows you how to get M&A deals done right." "Containing valuable tools, checklists, and sample documents, the book spells out the latest trends and developments in middle-market M&A best practices, and walks you through every step of the deal, from preliminary considerations to due diligence, through each and every piece of necessary documentation, all the way to closing" "The book explains key market conditions and trends, how to understand and take into consideration the motivations of each party, and ways to evaluate possible alternative paths to achieving growth goals and objectives." "Written in an easy-to-read, easy-to-understand, nontechnical voice, and presenting creative strategies for structuring and financing M&A transactions during turbulent market conditions, this long-trusted guide reveals how to boost both the immediate financial position and the long-term outlook for your organization." "Illustrating what works and why with case studies and war stories, the book brings you up to speed on the essential steps and guidelines behind well-executed M&A transactions. Whether you're a novice or a veteran to the complex world of mergers and acquisitions, this book ensures that you have a thorough understanding of the latest key economic trends and market conditions that may affect your deal...and gives you the assuance you need to get the deal done smoothly and ensure post-transaction success."--BOOK JACKET. "The power your company can generate in concert with another is immense. But mergers and acquisitions are incredibly complicated, involving issues ranging from valuation and deal structure to tax and securities laws. And things have only gotten more complicated in the increasingly global, postMadoff era." "A comprehensive, handson resourcenow fully revised and updatedthe third edition of Mergers and Acquisitions from A to Z shows you how to get M & A deals done right." "Containing valuable tools, checklists, and sample documents, the book spells out the latest trends and developments in middlemarket M & A best practices, and walks you through every step of the deal, from preliminary considerations to due diligence, through each and every piece of necessary documentation, all the way to closing" "The book explains key market conditions and trends, how to understand and take into consideration the motivations of each party, and ways to evaluate possible alternative paths to achieving growth goals and objectives." "Written in an easytoread, easytounderstand, nontechnical voice, and presenting creative strategies for structuring and financing M & A transactions during turbulent market conditions, this longtrusted guide reveals how to boost both the immediate financial position and the longterm outlook for your organization." "Illustrating what works and why with case studies and war stories, the book brings you up to speed on the essential steps and guidelines behind wellexecuted M & A transactions. Whether you're a novice or a veteran to the complex world of mergers and acquisitions, this book ensures that you have a thorough understanding of the latest key economic trends and market conditions that may affect your deal ... and gives you the assuance you need to get the deal done smoothly and ensure posttransaction success."BOOK JACKET Talking mergers and acquisitions for small- to mid-sized companies can sound exciting as the architects behind the deals are wide-eyed with effective growth strategies.However, these complex transactions carry significant risk, and it is absolutely vital for all involved in the deal to make sure they are guarding themselves against costly mistakes that have been the downfall for many leaders and organizations before them.Complete with expert advice, case studies, checklists, and sample documents, law attorney and author Andrew Sherman walks you through every step of the process--from valuation to securities laws to closing and successful integration.In Mergers and Acquisitions from A to Z, Sherman explains further how to:conduct due diligence,calculate the purchase price,understand the roles and risks for boards, and more.When done correctly and cautiously while fully educated on all avenues of the process, your company's next merger or acquisition should be an exciting, profitable time as you take steps to eliminate rivals, extend territory, and diversify offerings.But you must first be prepared! Don't make another deal without Mergers and Acquisitions from A to Z and its strategic, legal guidance by your side.