EXTENSION TO CASH-FOR-STOCK DEALS
CHOOSING EXCHANGE RATIO TARGETS IN THE WIN-WIN ZONE
SUMMARY AND IMPLICATIONS OF THE EXCHANGE RATIO FRAMEWORK
APPENDIX 21.1 Derivation of the Exchange Rate Determination Model Based on the Price-Earnings Ratio Regarding Share-for-Share Exchanges (Larson-Gonedes Model)
BUYER’S MAXIMUM ACCEPTABLE EXCHANGE RATIO (P/E MODEL)
TARGET’S MINIMUM ACCEPTABLE EXCHANGE RATIO (P/E MODEL)
APPENDIX 21.2 Derivation of the Exchange Rate Model Based on Discounted Cash Flow Regarding Share-for-Share Exchanges
BUYER’S MAXIMUM ACCEPTABLE EXCHANGE RATIO (DCF MODEL)
TARGET’S MINIMUM ACCEPTABLE EXCHANGE RATIO
APPENDIX 21.3 Derivation of the Exchange Rate Determination Model Based on the Price/Earnings Ratio Regarding Cash-for-Share Exchanges
BUYER’S MAXIMUM ACCEPTABLE EXCHANGE RATIO (P/E MODEL)
TARGET’S MINIMUM ACCEPTABLE EXCHANGE RATIO (P/E MODEL)
APPENDIX 21.4 Derivation of the Exchange Rate Model Based on Discounted Cash Flow Regarding Cash-for-Share Exchanges
BUYER’S MAXIMUM ACCEPTABLE EXCHANGE RATIO (DCF MODEL)
TARGET’S MINIMUM ACCEPTABLE EXCHANGE RATIO
APPENDIX 21.5 Derivation of Equation (3) Exchange Ratio Consistent with Buyer’s Percentage Contribution to Newco
NOTES
CHAPTER 22: Structuring and Valuing Contingent Payments in M&A
OVERVIEW AND SUMMARY
CONTINGENT PAYMENTS IN M&A
EARNOUTS CAN BE USEFUL; BUT IF SO, WHY AREN’T THEY UBIQUITOUS?
EARNOUTS ARE OPTIONS ON FUTURE PERFORMANCE
STRUCTURING AN EARNOUT
TAX AND ACCOUNTING CONSIDERATIONS
GENERIC APPROACH TO VALUING EARNOUT INSTRUMENTS
Epilogue
CONCLUSION: PROPOSING AND NEGOTIATING EARNOUTS AND OTHER CONTINGENT PAYMENTS
NOTES
CHAPTER 23: Risk Management in M&A
INTRODUCTION AND SUMMARY
VALUE AT RISK WHEN A DEAL FAILS
TRANSACTION RISK: TYPES AND SOURCES
TYPES OF RISK MANAGEMENT
TYPES OF COLLARS AND THEIR ANALYSIS
CONTINGENT VALUE RIGHTS: RHÔNE-POULENC’S ACQUISITION OF RORER
STAGED ACQUIRING: THE CASE OF GENZYME’S INVESTMENT IN GELTEX
CONCLUSION: WHERE AND WHEN TO MANAGE RISK
NOTES
CHAPTER 24: Social Issues
INTRODUCTION: THE IMPORTANCE OF SOCIAL ISSUES IN M&A
SURVEY OF SOCIAL ISSUES FREQUENTLY ADDRESSED IN MERGER NEGOTIATIONS
IMPACT OF SOCIAL ISSUES ON ATTRACTIVENESS OF THE DEAL
CASE STUDIES IN THE ROLE OF SOCIAL ISSUES
SUMMARY AND CONCLUSIONS
NOTES
12 PART Five: Rules of the Road: Governance, Laws, and Regulations CHAPTER 25: How a Negotiated Deal Takes Shape INTRODUCTION OVERVIEW OF THE DEAL SHAPING PROCESS RISKS TO THE DEAL: HOW THE PROCESS CAN GET DERAILED TRANSACTION PLANNING AND PREPARATION INITIATING DISCUSSIONS: GAINING AN EARLY SENSE OF THE POSSIBILITIES FIRST-ROUND DOCUMENTS: TERM SHEET, LETTER OF INTENT, AGREEMENTS ABOUT CONFIDENTIALITY, STANDSTILL, AND ENGAGEMENT OF ADVISERS THE DEFINITIVE AGREEMENT DISCLOSURE TO INVESTORS AND REGULATORS GAINING APPROVAL FOR THE DEAL CASE STUDY: DAIMLER-BENZ AND CHRYSLER SUMMARY AND CONCLUSIONS NOTES CHAPTER 26: Governance in M&A: The Board of Directors and Shareholder Voting INTRODUCTION GOVERNING WELL IS HARD TO DO GOOD GOVERNANCE PAYS HOW SHAREHOLDERS RULE FIDUCIARY DUTIES OF TARGET DIRECTORS IN CONSIDERING M&A PRACTICAL IMPLICATIONS: PREPARING FOR THE BOARD’S REVIEW OF A DEAL CODA: HOW CAN FIRMS BE GOVERNED BETTER? NOTES CHAPTER 27: Rules of the Road: Securities Law, Issuance Process, Disclosure, and Insider Trading INTRODUCTION OVERVIEW OF KEY SECURITIES LAWS AND RULES IN THE UNITED STATES KEY IMPLICATION: DISCLOSURE KEY IMPLICATION: INSIDER TRADING KEY IMPLICATION: OBSERVANCE OF PROCESS
