The Art of Capital Restructuring E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Robert W. Kolb Series
• Sprache: Englisch

Seitenzahl: 1287

Veröffentlichungsjahr: 2011

Beschreibung

The most up-to-date guide on making the right capital restructuring moves The Art of Capital Restructuring provides a fresh look at the current state of mergers, acquisitions, and corporate restructuring around the world. The dynamic nature of M&As requires an evolving understanding of the field, and this book considers several different forms of physical restructuring such as divestitures as well as financial restructuring, which refers to alterations in the capital structure of the firm. The Art of Capital Restructuring not only explains the financial aspects of these transactions but also examines legal, regulatory, tax, ethical, social, and behavioral considerations. In addition to this timely information, coverage also includes discussion of basic concepts, motives, strategies, and techniques as well as their application to increasingly complex, real-world situations. * Emphasizes best practices that lead to M&A success * Contains important and relevant research studies based on recent developments in the field * Comprised of contributed chapters from both experienced professionals and academics, offering a variety of perspectives and a rich interplay of ideas Skillfully blending theory with practice, this book will put you in a better position to make the right decisions with regard to capital restructuring in today's dynamic business world.

Leseprobe

Contents

Cover

Series

Title Page

Copyright

Acknowledgments

Chapter 1: Mergers, Acquisitions, and Corporate Restructuring: An Overview

INTRODUCTION

PURPOSE OF THE BOOK

DISTINGUISHING FEATURES OF THE BOOK

INTENDED AUDIENCE FOR THE BOOK

STRUCTURE OF THE BOOK

SUMMARY AND CONCLUSIONS

ABOUT THE AUTHORS

Part I: Background

Chapter 2: Merger Waves

INTRODUCTION

MERGER MOTIVES

MERGER WAVES

DISCUSSION AND NEW DIRECTIONS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 3: Takeover Regulation

INTRODUCTION

THE FUNCTIONS OF TAKEOVER REGULATION

TAKEOVER REGULATION PROVISIONS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 4: Corporate Governance and M&As

INTRODUCTION

M&AS AS A MANAGERIAL DISCIPLINARY DEVICE

CORPORATE GOVERNANCE AND ACQUIRER WEALTH EFFECTS

THE MARKET FOR CORPORATE CONTROL

PRODUCT MARKET COMPETITION

BOARD CHARACTERISTICS

MANAGERIAL EQUITY INCENTIVES

INSTITUTIONAL OWNERSHIP

MONITORING BY INDIVIDUAL BLOCKHOLDERS

LEVERAGE AND CREDITOR CONTROL

CORPORATE GOVERNANCE AND TARGET WEALTH EFFECTS

CORPORATE GOVERNANCE AND ACQUIRER-TARGET COMBINED RETURNS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 5: Ethical and Social Issues in M&As

INTRODUCTION

APPLYING ETHICAL PRINCIPLES

MERGERS AND ACQUISITIONS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 6: Theoretical Issues on Mergers, Acquisitions, and Divestitures

INTRODUCTION

THEORETICAL ISSUES FOR MERGERS, ACQUISITIONS, AND DIVESTITURES

THEORETICAL ISSUES MOTIVATING CORPORATE DIVESTITURES

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 7: The Short-Term and Long-Term Performance of M&As

INTRODUCTION

SHORT-TERM PERFORMANCE OF TARGET AND ACQUIRING FIRMS

LONG-TERM STOCK RETURN PERFORMANCE OF ACQUIRING FIRMS

LONG-TERM OPERATING PERFORMANCE OF ACQUIRING FIRMS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Part II: Valuation

Chapter 8: Standard Valuation Methods for M&As

INTRODUCTION

BALANCE SHEET–BASED METHODS

INCOME STATEMENT–BASED METHODS

OTHER MULTIPLES

DISCOUNTED CASH FLOW METHODS

CALCULATING THE VALUE OF A COMPANY USING FCF

CALCULATING THE UNLEVERED VALUE OF THE COMPANY

VALUE CREATION METHODS USING ECONOMIC VALUE ADDED AND ECONOMIC PROFIT

THE DISPERSION OF THE DISCOUNT RATE

THE EQUITY PREMIUM

CRITICAL ASPECTS OF A VALUATION

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 9: Real Options and Their Impact on M&As

INTRODUCTION

REAL OPTIONS ANALYSIS FOR M&AS

LITERATURE REVIEW OF REAL OPTIONS IN THE M&A PROCESS

THE PRACTICE OF REAL OPTIONS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 10: The Law and Finance of Control Premiums and Minority Discounts

INTRODUCTION

DEFINITION OF CONTROL PREMIUM/MINORITY DISCOUNT

DELAWARE LAW, DELAWARE COURTS, VALUES, AND DISCOUNTS

SOURCES OF THE ECONOMIC BENEFITS OF CONTROL

EVIDENCE ON THE VALUE OF CONTROL

CAN PRACTICE BE RECONCILED WITH FINANCE THEORY AND EVIDENCE?

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 11: Cross-Border Valuation Effects in Developed and Emerging Markets

INTRODUCTION

CROSS-BORDER M&A DEALS: AN OVERVIEW

CROSS-BORDER M&A DEALS IN DEVELOPED AND EMERGING MARKETS

THE FUTURE OF CROSS-BORDER M&A MARKET

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Part III: The M&A Deal Process

Chapter 12: Sources of Financing and Means of Payment in M&As

INTRODUCTION

HISTORICAL OVERVIEW

VALUATION EFFECT OF TAKEOVER FINANCING AND PAYMENT DECISIONS

THE DETERMINANTS OF TAKEOVER FINANCING AND PAYMENT DECISIONS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 13: Cultural Due Diligence

INTRODUCTION

ORGANIZATIONAL CULTURE AND ITS IMPACT ON FIRMS

ASSESSING ORGANIZATIONAL CULTURE

MULTIPLE CULTURES WITHIN THE SAME FIRM

CULTURAL DUE DILIGENCE

INTEGRATING DIVERSE CULTURES

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 14: Negotiation Process, Bargaining Area, and Contingent Payments

INTRODUCTION

COMMENCEMENT OF THE PROCESS

A PROPOSAL IN PRINCIPLE BY THE BUYER

OUTSIDE FACTORS AFFECTING THE NEGOTIATIONS

HOW SHOULD THE BUYER PREPARE FOR THE NEGOTIATION?

HOW SHOULD THE SELLER PREPARE FOR NEGOTIATIONS?

THE NEGOTIATING TEAM FOR THE BUYER AND THE SELLER

TYPICAL MATTERS TO BE NEGOTIATED

ESTABLISHING A FRAMEWORK FOR THE NEGOTIATIONS

NEGOTIATION STRATEGY FOR THE BUYER

REACHING A PRELIMINARY UNDERSTANDING

KEEPING THE DEAL TOGETHER

HOW WOULD THIS PROCESS DIFFER IF THE SELLER IS A PRIVATELY HELD COMPANY?

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 15: Merger Negotiations: Takeover Process, Selling Procedure, and Deal Initiation

INTRODUCTION

THE TAKEOVER PROCESS

SAMPLE SELECTION

CHOICE OF SELLING METHOD AND DEAL INITIATION

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 16: Postacquisition Planning and Integration

INTRODUCTION

THE INTEGRATION PROCESS: A CLOSER LOOK

MEASURING M&A PERFORMANCE

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 17: Organizational and Human Resource Issues in M&As

INTRODUCTION

ORGANIZATIONAL PERSPECTIVE

HUMAN RESOURCE PERSPECTIVE

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Part IV: Takeovers and Behavioral Effects

Chapter 18: Takeover Strategies

INTRODUCTION

ANTECEDENTS

CHARACTERISTICS

CONSEQUENCES

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 19: Defensive Strategies in Takeovers

INTRODUCTION

PREVENTIVE DEFENSE TACTICS

REMEDIAL DEFENSE TACTICS

THE FINANCIAL CRISIS AND HOSTILE TAKEOVERS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 20: The Impact of Restructuring on Bondholders

INTRODUCTION

THEORETICAL BACKGROUND

EMPIRICAL EVIDENCE

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 21: Behavioral Effects in M&As

INTRODUCTION

NEOCLASSICAL EXPLANATIONS FOR M&As

BEHAVIORAL EXPLANATIONS FOR M&As

CORPORATE GOVERNANCE AND BEHAVIORAL EFFECTS IN M&As

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Part V: Recapitalization and Restructuring

Chapter 22: Financial Restructuring

INTRODUCTION

SHARE REPURCHASES

DUAL-CLASS RECAPITALIZATIONS

EXCHANGE OFFERS AND SWAPS

DEBT RESTRUCTURINGS VIA PRIVATE WORKOUTS AND FORMAL BANKRUPTCY

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 23: Going Private and Leveraged Buyouts

INTRODUCTION

PRIVATE EQUITY INDUSTRY AND PROPERTIES OF TYPICAL LBO TRANSACTIONS

WAVES OF PRIVATE EQUITY TRANSACTIONS

EXIT EVENTS AND HOLDING PERIODS IN PRIVATE EQUITY INVESTMENTS

VALUE CREATION IN PUBLIC-TO-PRIVATE TRANSACTIONS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 24: International Takeovers and Restructuring

INTRODUCTION

FACTORS MOTIVATING INTERNATIONAL TAKEOVERS

ISSUES TO CONSIDER IN INTERNATIONAL TAKEOVERS

EMPIRICAL EVIDENCE

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Part VI: Special Topics

Chapter 25: Joint Ventures and Strategic Alliances: Alternatives to M&As

INTRODUCTION

THE COSTS OF SHARING OWNERSHIP

COSTS OF INTEGRATION

JOINT VENTURES OR NONEQUITY ALLIANCES

CROSS-BORDER DEALS

DO M&As OR ALLIANCES CREATE MORE VALUE FOR SHAREHOLDERS?

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 26: Fairness Opinions in M&As

INTRODUCTION

INSTITUTIONAL DETAILS

LEGAL ORIGINS

THE LEGAL LITERATURE

THE FINANCE LITERATURE

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 27: How Initial Public Offerings Affect M&A Markets: The Dual Tracking Phenomenon

INTRODUCTION

FRAMING THE DETERMINANTS OF DUAL TRACKING

THE IMPLICATIONS OF DUAL TRACKING

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Chapter 28: The Diversification Discount

INTRODUCTION

MEASURING THE EFFECT OF DIVERSIFICATION ON FIRM VALUE

DEBATES ON THE DIVERSIFICATION DISCOUNT

THE DYNAMIC PATTERN IN THE DIVERSIFICATION DISCOUNT

INTERNATIONAL EVIDENCE ON THE DIVERSIFICATION DISCOUNT

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHOR

Chapter 29: Partial Acquisitions: Motivation and Consequences on Firm Performance

INTRODUCTION

MOTIVATION OF PARTIAL ACQUISITIONS

CONSEQUENCES OF PARTIAL ACQUISITIONS

FACTORS AFFECTING PARTIAL ACQUISITIONS AND TARGET FIRM PERFORMANCE

SUBSEQUENT FINANCIAL POLICIES AFTER THE PARTIAL ACQUISITIONS

SUMMARY AND CONCLUSIONS

DISCUSSION QUESTIONS

REFERENCES

ABOUT THE AUTHORS

Answers to End-of-Chapter Discussion Questions

CHAPTER 2 MERGER WAVES

CHAPTER 3 TAKEOVER REGULATION

CHAPTER 4 CORPORATE GOVERNANCE AND M&AS

CHAPTER 5 ETHICAL AND SOCIAL ISSUES IN M&AS

CHAPTER 6 THEORETICAL ISSUES ON MERGERS, ACQUISITIONS, AND DIVESTITURES

CHAPTER 7 THE SHORT-TERM AND LONG-TERM PERFORMANCE OF M&AS

CHAPTER 8 STANDARD VALUATION METHODS FOR M&AS

CHAPTER 9 REAL OPTIONS AND THEIR IMPACT ON M&AS

CHAPTER 10 THE LAW AND FINANCE OF CONTROL PREMIUMS AND MINORITY DISCOUNTS

CHAPTER 11 CROSS-BORDER VALUATION EFFECTS IN DEVELOPED AND EMERGING MARKETS

CHAPTER 12 SOURCES OF FINANCING AND MEANS OF PAYMENTS IN M&AS

CHAPTER 13 CULTURAL DUE DILIGENCE

CHAPTER 14 NEGOTIATION PROCESS, BARGAINING AREA, AND CONTINGENT PAYMENTS

CHAPTER 15 MERGER NEGOTIATIONS: TAKEOVER PROCESS, SELLING PROCEDURE, AND DEAL INITIATION

CHAPTER 16 POSTACQUISITION PLANNING AND INTEGRATION

CHAPTER 17 ORGANIZATIONAL AND HUMAN RESOURCE ISSUES IN M&AS

CHAPTER 18 TAKEOVER STRATEGIES

CHAPTER 19 DEFENSE STRATEGIES IN TAKEOVERS

CHAPTER 20 THE IMPACT OF RESTRUCTURING ON BONDHOLDERS

CHAPTER 21 BEHAVIORAL EFFECTS IN M&AS

CHAPTER 22 FINANCIAL RESTRUCTURING

CHAPTER 23 GOING PRIVATE AND LEVERAGED BUYOUTS

CHAPTER 24 INTERNATIONAL TAKEOVERS AND RESTRUCTURING

CHAPTER 25 JOINT VENTURES AND STRATEGIC ALLIANCES: ALTERNATIVES TO M&AS

CHAPTER 26 FAIRNESS OPINIONS IN M&AS

CHAPTER 27 HOW INITIAL PUBLIC OFFERINGS AFFECT M&A MARKETS: THE DUAL TRACKING PHENOMENON

CHAPTER 28 THE DIVERSIFICATION DISCOUNT

CHAPTER 29 PARTIAL ACQUISITIONS: MOTIVATION AND CONSEQUENCES ON FIRM PERFORMANCE

Index

The Robert W. Kolb Series in Finance provides a comprehensive view of the field of finance in all of its variety and complexity. The series is projected to include approximately 65 volumes covering all major topics and specializations in finance, ranging from investments, to corporate finance, to financial institutions. Each volume in the Kolb Series in Finance consists of new articles especially written for the volume.

Each volume is edited by a specialist in a particular area of finance, who develops the volume outline and commissions articles by the world's experts in that particular field of finance. Each volume includes an editor's introduction and approximately thirty articles to fully describe the current state of financial research and practice in a particular area of finance.

The essays in each volume are intended for practicing finance professionals, graduate students, and advanced undergraduate students. The goal of each volume is to encapsulate the current state of knowledge in a particular area of finance so that the reader can quickly achieve a mastery of that special area of finance.

Please visit www.wiley.com/go/kolbseries to learn about recent and forthcoming titles in the Kolb Series.

Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

The art of capital restructuring : creating shareholder value through mergers and acquisitions / H. Kent Baker and Halil Kiymaz, editors. p. cm. – (The Robert W. Kolb series in finance) Includes index. ISBN 978-0-470-56951-1 (cloth); ISBN 978-1-11803035-6 (ebk); ISBN 978-1-11803033-2 (ebk); ISBN 978-1-11803034-9 (ebk) 1. Consolidation and merger of corporations. 2. Corporate reorganizations. 3. Corporate governance. 4. Corporations–Valuation. I. Baker, H. Kent (Harold Kent), 1944– II. Kiymaz, Halil, 1964– HG4028.M4A78 2011 658.1'62 2010047236

Acknowledgments

The expression “it takes a village” aptly applies to this book because it has involved a large cast of participants in which each has provided important contributions. At the heart of The Art of Capital Restructuring is the outstanding work of the scholars who wrote the chapters as well as the authors whose work is cited therein. Meghan Nesmith meticulously reviewed the chapters and provided many helpful edits and substantive suggestions. Thomas Bradley also provided assistance. We thank our talented publishing team at John Wiley & Sons, especially Emilie Herman and Claire Wesley, who took the manuscript to final production while demonstrating professionalism and expertise throughout the process. Bob Kolb, the series editor, deserves our appreciation for his vision in developing this series. We also want to recognize the support provided by the Kogod School of Business at American University and the Crummer Graduate School of Business at Rollins College. Finally, our friends and families, who have been silent partners in this effort, deserve our gratitude. Linda Baker deserves special thanks for editorial assistance and her endless patience and support. Nilgun Kiymaz also provided support that warrants special recognition.

CHAPTER 1

Mergers, Acquisitions, and Corporate Restructuring: An Overview

H. KENT BAKER

University Professor of Finance and Kogod Research Professor, American University

HALIL KIYMAZ

Bank of America Chair and Professor of Finance, Rollins College

INTRODUCTION

An important question in finance is whether managerial actions create market value or shareholder wealth. Neoclassical economic theory assumes that corporate management acts to maximize shareholder wealth. Studies involving mergers and acquisitions (M&As) directly examine this issue. Such studies, which are relevant to shareholders, managers, regulators, and other stakeholders, show considerable variation in their results. Thus, debate continues about both the short-term and long-term performance of M&As. As markets become more integrated, M&As continue to be a hot topic in both academia and the business world. Given the frequency of these activities, businesspeople need to understand why and how such activities take place.

Although sometimes used interchangeably or synonymously, the terms merger and acquisition mean slightly different things. A merger is a combination of two or more companies in which one company survives and the merged company goes out of existence. Unlike a merger, a consolidation is a business combination in which two or more companies join to form an entirely new firm. With an acquisition, one company takes controlling ownership interest in another firm, typically buying the selected assets or shares of the target company. On the surface, the distinction in meaning may not seem to matter because all of them are strategic transactions that usually change not only the control of a company but also its strategic direction. Depending on the transaction, the financial, legal, tax, and even cultural impact of a deal may differ substantially.

M&As represent a fast-paced and highly complex environment in which transactions provide unique opportunities with considerable risk. Worldwide M&A transactions involve trillions of dollars that can have a major impact on both domestic and global economies. M&As are a vital part of any healthy economy because they force firms to use their resources efficiently and allow strong companies to grow and weaker companies to be swallowed. Further, M&As enable firms to achieve or maintain their competitive advantage by anticipating and adjusting to change. Through M&As a company can grow rapidly without having to create another business entity. Consequently, M&As represent a vital business tool and an alternative growth and expansion strategy for many companies. In short, an M&A is an instrument of macroeconomic renewal. Yet, these complex transactions are laden with potential problems and pitfalls. In fact, many M&A transactions fail to realize expected benefits. Understanding how to ensure the successful consummation of these transactions is critical to the goal of maximizing shareholder wealth.

PURPOSE OF THE BOOK

This book provides a fresh look at the current state of mergers, acquisitions, and corporate restructuring in both developed and emerging markets. Although M&As generally focus on corporate expansion, companies sometimes contract and downsize their operations. Restructuring refers to the act of partially dismantling or otherwise reorganizing a company for the purpose of making it more profitable. This book considers several different forms of physical restructuring such as divestitures as well as capital restructuring, which refers to alterations in the capital structure of the firm. This volume explains not only the financial aspects of these transactions but also legal, regulatory, tax, ethical, social, and behavioral considerations. In short, although economics plays an essential role in understanding M&A activity, psychology also plays a critical part. Thus, achieving “success” in any M&A effort is a combination of both art and science.