Applied mergers and acquisitions with CD-ROM Wiley Finance Series, Vol. 173

A comprehensive guide to the world of mergers and acquisitions Why do so many M&A transactions fail? And what drives the success of those deals that are consummated? Robert Bruner explains that M&A can be understood as a response by managers to forces of turbulence in their environment. Despite the material failure rates of mergers and acquisitions, those pulling the trigger on key strategic decisions can make them work if they spend great care and rigor in the development of their M&A deals. By addressing the key factors of M&A success and failure, Applied Mergers and Acquisitions can help readers do this. Written by one of the foremost thinkers and educators in the field, this invaluable resource teaches readers the art and science of M&A valuation, deal negotiation, and bargaining, and provides a framework for considering tradeoffs in an effort to optimize the value of any M&A deal. Applied Mergers and Acquisitions is part of a complete suite of resources on M&A that includes a workbook and a CD-ROM with additional spreadsheets. Robert F. Bruner, MBA, DBA (Charlottesville, VA), is the Distinguished Professor of Business Administration at the Darden School at the University of Virginia and Executive Director of the Batten Institute. He directs the Darden School's executive education course on mergers and acquisitions, and teaches the popular MBA elective on that topic. He holds a BA from Yale University, and a MBA and DBA from Harvard University. 471395064 A comprehensive guide to the world of mergers and acquisitions 0471395064 A comprehensive guide to the world of mergers and acquisitions Why do so many M&A transactions fail? And what drives the success of those deals that are consummated? Robert Bruner explains that M&A can be understood as a response by managers to forces of turbulence in their environment. Despite the material failure rates of mergers and acquisitions, those pulling the trigger on key strategic decisions can make them work if they spend great care and rigor in the development of their M&A deals. By addressing the key factors of M&A success and failure, Applied Mergers and Acquisitions can help readers do this. Written by one of the foremost thinkers and educators in the field, this invaluable resource teaches readers the art and science of M&A valuation, deal negotiation, and bargaining, and provides a framework for considering tradeoffs in an effort to optimize the value of any M&A deal. Applied Mergers and Acquisitions is part of a complete suite of resources on M&A that includes a workbook and a CD-ROM with additional spreadsheets. Robert F. Bruner, MBA, DBA (Charlottesville, VA), is the Distinguished Professor of Business Administration at the Darden School at the University of Virginia and Executive Director of the Batten Institute. He directs the Darden School's executive education course on mergers and acquisitions, and teaches the popular MBA elective on that topic. He holds a BA from Yale University, and a MBA and DBA from Harvard University.

Foreword. . Part 1: Introduction and Key Themes . CHAPTER 1: Introduction and Executive Summary A Framework for M&A Success. Seven New Big Ideas Worthy of the Best Practitioners. CHAPTER 2: Ethics in M&A Why Should One Care? In Whose Interests? What Is Good?Consequences, Duties, Virtues. Promoting Ethical Behavior. Greenmail Case: Walt Disney, 1984. CHAPTER 3: Does M&A Pay? The Measurement of M&A Profitability: Better Than What? Findings Based on the Analysis of Returns to Shareholders. Findings Based on the Analysis of Reported Financial Performance. Findings about the Drivers of Profitability. Findings from Surveys of Executives. Findings from Clinical Studies. . Part 2: Strategy and the Origination of Transaction Proposals . CHAPTER 4: M&A Activity M&A Activity Appears in Waves. Explanations of M&A Activity. as the Driver of M&A Activity. The Many Forms of Economic Turbulence, and Where to Look for It. Turbulence Drives M&A Activities and Opportunities. CHAPTER 5: Cross-Border M&A Cross-Border M&A Activity. M&A within Regions and Trading Blocs. Drivers of and Returns from Cross-Border M&A. Strategic Analysis of Countries: Getting a CHAPTER 6: Strategy and the Uses of M&A to Grow or Restructure the Firm Setting Strategy. Expansion by Inorganic Growth. Restructuring, Redeployment, and Sale. Choosing a Path. Does It Pay to Diversify or Focus the Firm? CHAPTER 7: Acquisition Search and Deal Origination: Some Guiding Principles Eight Principles of Acquisition Search. Case Study: Kestrel Ventures LLC. . Part 3: Diligence, Valuation, and Accounting . CHAPTER 8: Due Diligence The Concept of Due Diligence. Principles and Strategies. Timing, Team, and Outputs. The Targets View: The Data Room and Its Pressures. Focus on Knowledge. Excellence in Due Diligence. CHAPTER 9: Valuing Firms Rule 1: Think Like an Investor. Rule 2: Intrinsic Value Is Unobservable, We Can Only Estimate It. Rule 3: An Opportunity to Create Value Exists Where Price and Intrinsic Value Differ. Rule 4: So Many Estimators, So Little Time Triangulate Carefully. Rule 7: Focus on Process, Not Product. Rule 8: When in Doubt, see Rule 1. Valuation Case: Chrysler Corporation, March 1998. CHAPTER 10: Valuing Options Option Basics. Option Theory. Option Applications. A Practical Guide to Financial Option Valuation, with Some Important Caveats. CHAPTER 11: Valuing Synergies The Concept of Synergy. Synergy Estimates Must Be a Central Focus of M&A Analysis. A Framework for Synergy Analysis. Estimating Synergy Value, with Examples. Synergies in the Daimler/Chrysler Merger. Rules of Thumb. CHAPTER 12: Valuing the Firm across Borders How Borders Affect M&A Valuation. Strategy for DCF Approach: Home versus Foreign Valuation. Adjusting Cash Flows. Estimating the Discount Rate. Recapitulation: Valuation Process with Adjusted CAPM. Valuation Cases across Borders. CHAPTER 13: Valuing the Highly Levered Firm, Assessing the Highly Levered Transaction The World of Highly Levered Firms. The Effect of Leverage on Firm Value. The Approach. A Case in Leveraged Recapitalization: Koppers Company. LBO Case: MediMedia International, Ltd. LBO Case 2: Revco Drug Stores. CHAPTER 14: Real Options and Their Impact on M&A Types of Real Options. Where Real Options Appear in M&A. Why Not Value Everything as an Option? How to Assess the Impact of Real Options. Four Mini-Cases in the Analysis of Real Options. CHAPTER 15: Valuing Liquidity and Control Adjusting Values for Discounts and Premiums. Where Do Illiquidity Discounts Come From? Where Do Control Premiums Come From? Interaction of Liquidity and Control. Case Study: Volvo/Renault, 1993. CHAPTER 16: Financial Accounting for Mergers and Acquisitions Overview of Purchase Accounting. How to Interpret Reported Financial Results from a Business Combination. Linkage among Accounting Choices, Form of Payment, Financing, and Price. Dangers of Earnings Management. CHAPTER 17: Momentum Acquisition Strategies: An Illustration of Why Value Creation Is the Best Financial Criterion Four Cautionary Tales. Momentum Acquisition Strategies. The Arguments for and against Momentum Acquiring. Value Creation Is the Best Criterion for Evaluating Acquisition Strategies. Momentum versus Value Strategies. . Part 4: Design of Detailed Transaction Terms . CHAPTER 18: An Introduction to Deal Design in M & A. Deal Structures Are Solutions to Economic Problems. Possible Desirables in Designing a Deal. Design Leads to Results. Each Deal Is a System: The Perspective. Some Implications for the Deal Designer. CHAPTER 19: Choosing the Form of Acquisitive Reorganization Five Key Concerns for the Deal Designer. Deals That Are Immediately Taxable to the Selling Shareholders. Deals That Defer Tax to the Selling Shareholders. CHAPTER 20: Choosing the Form of Payment and Financing Patterns and Trends in Form of Payment. Does Form of Payment Matter? Considerations in Selecting the Form of Payment. Assessing the Financing Aspects of a Deal. CHAPTER 21: Framework for Structuring the Terms of Exchange: Finding the Deal A Model for Critically Assessing Exchange Ratios. Uses and Illustration of the Model. Extension to Cash-for-Stock Deals. Choosing Exchange Ratio Targets in the Zone. CHAPTER 22: Structuring and Valuing Contingent Payments in M&A Contingent Payments in M&A. Earnouts Can Be Useful, But If So, Why Arent They Ubiquitous? Earnouts Are Options on Future Performance. Structuring an Earnout. Tax and Accounting Considerations. A Generic Approach to Valuing Earnout Instruments. The Eli Lilly Case. Proposing and Negotiating an Earnout and Other Contingent Payments. CHAPTER 23: Risk Management in M&A Value at Risk When a Deal Fails. Transaction Risk: Types and Sources. Types of Risk Management. Collars and Their Analysis. Contingent Value Rights Case. Staged Acquiring Case. Where and When to Manage Risk. CHAPTER 24: Social Issues The Importance of Social Issues in M&A. Survey of Social Issues. Impact of Social Issues on Attractiveness of the Deal. Case Studies in the Role of Social Issues. Part 5: Rules of the Road: Governance, Laws, and Regulations. CHAPTER 25: How a Negotiated Deal Takes Place The Deal Shaping Process. Risks: How the Process Can Get Derailed. Transaction Planning and Preparation. Initiating Discussions. First-Round Documents. The Definitive Ag

ROBERT F. BRUNER is the Distinguished Professor of Business Administration at the Darden School of the University of Virginia and Executive Director of the Batten Institute. He directs the Darden School’s executive education course on mergers and acquisitions, and teaches the popular MBA elective on that topic. He is the author of over 250 case studies and a casebook, Case Studies in Finance: Managing for Corporate Value Creation, which has been adopted for use at over 200 schools. Bruner's articles have been published in the Journal of Financial Economics, the Journal of Accounting and Economics, the Journal of Financial and Quantitative Analysis, the Journal of Money, Credit, and Banking, and Financial Management. He has served as a consultant to over twenty corporations as well as to the U.S. Government, and prior to his academic career, worked as a commercial banker and venture capitalist. Bruner holds a BA from Yale University, and an MBA and DBA from Harvard University.