Mergers and Acquisitons: A Step-by-Step Legal and Practical Guide
Praise for Mergers and Acquisitions\ "Buyers and sellers both hope to be winners in an acquisition. But at the negotiating table, there is only one winner for each point and winning may mean a significant change in the deal economics. The insights in this book are crucial for both buyers and sellers and lay out the rationale for both sides of all of the money issues and other important deal points."\ —Todd Koopersmith, Vice President, Business Development, Iron Mountain\ "This book will help...
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Praise for Mergers and Acquisitions "Buyers and sellers both hope to be winners in an acquisition. But at the negotiating table, there is only one winner for each point and winning may mean a significant change in the deal economics. The insights in this book are crucial for both buyers and sellers and lay out the rationale for both sides of all of the money issues and other important deal points." -Todd Koopersmith, Vice President, Business Development, Iron Mountain "This book will help M&A professionals get up to speed on a wide range of deal points. It explains the legal background and transaction structuring issues in M&A transactions that every investment professional must know." -Gregory Burkus, founder and partner, Shasta Partners "This book is an essential resource for business people, and the lawyers and other professionals who advise them, to develop a real-world understanding of how the M&A process works. More importantly, it explains why specific deal structures, contractual terms and diligence procedures are used." -Jonathan Wolfman, Partner, WilmerHale, Boston "As U.S. M&A concepts, documents and practices become increasingly adopted internationally, this book will be an invaluable resource. It provides an excellent overview of the entire area, and is easily understandable by corporate executives and lawyers outside the United States." -Leo Specht, founder, Specht Rechtsanwalts-Gesellschaft mbH, Vienna, Austria
Preface xiAcknowledgments xvAbout the Web Site xviiStructuring Fundamentals 1Basic Corporate Finance Concepts 1Reasons for Acquisitions 8Three Basic Acquisition Structures 13Structuring Considerations: Overview 16The Acquisition Process 23Overview 23Valuation of the Business 31Investment Bank Engagement Letters 35Confidentiality Agreements 40Letters of Intent 43Stay Bonuses and Other Employee Retention Arrangements 46Business And Legal Due Diligence 49Intellectual Property Due Diligence 64From Signing to Closing 77Appendixes 77Corporate (Non-Tax) Structuring Consdierations 79Business Objectives and Other Nontax Structuring Considerations 79Acquisition Structure Diagrams 89Forms of Acquisition Consideration 90Debt 95Cash, Stock, and Earnouts 110Successor Liability and the De Facto Merger Doctrine 116Securities Law Compliance 118Antitrust Compliance: Hart-Scott-Rodino Act 131Equity Compensation 138Incentive Stock Options 144Employment Agreements and Noncompetition Covenants 149Employment and Benefits Law 157Acquisition Accounting 160Recapitalization Accounting 165Cross-Border Acquisitions 166Appendixes 169Tax Considerations 171Taxable Versus Tax-Free Transactions: Overview of Relevant Situations 171Detailed Analysis of the Positions of the Target and Its Owners and of the Buyer 173Taxable Transactions and Their Tax Effects 175Tax-Free Transactions 180Special Situations 186Golden Parachute Tax 191The Definitive Acquisition Agreement 197Economic Terms 197Representations and Warranties 214Covenants 226Additional Agreements 230Conditions to Closing 231Survival of Representations and Indemnification 233Termination 238Miscellaneous 239Representing Targets: A Summary 239Appendixes 242Acquisitions of Public Companies 243Public-to-Public Mergers: What Is Different? 243Case Law-Developed Fiduciary Duites and Standards of Review 247Securities Laws and Public Company Acquisitions 272Anti-Takeover Devices 283Appendix 293Leveraged Buyouts (Structural and Tax Issues) and Acquisitions of a Troubled Business (Creditors' Rights and Bankruptcy) 295Leveraged Buyouts: Structural and Tax Issues 295Acquisition of a Troubled Business Generally 302Fraudulent Transfers 305Acquisitions out of Bankruptcy 313Index 323
