"A well written and comprehensive journey into M&A...an essential reference for any M&A practitioner...this
isn't just a book about great thoughts and process, but rather how to turn insight into deals, and deals into lasting
value."
--From the Foreword by Joseph R. Perella Chairman, Institutional Securities and Investment Banking Group, Morgan
Stanley
"Bob Bruner's Applied Mergers and Acquisitions is a masterful and comprehensive treatment of the topic
of M&A. The book is remarkably complete, discussing economic valuation, legal considerations, deal structure,
ethics, accounting, post-merger integration--and more. It blends material from practice and from academia in an
easy-to-read style, making it a must-read, and want-to-read, for anyone interested in this subject."
--Peter Tufano Sylvan C. Coleman Professor of Financial Management, Harvard Business School
Publisher Web Site, June, 2004
Summary
Text introduces and explains key themes in mergers and acquisitions, including strategy and the origination
of transaction proposals; diligence, valuation, and accounting; design of detailed transaction terms; hostile takeovers;
and more. Text without CD-ROM listed in approval week 2004-14. DLC: Consolidation and merger of corporations.
Table of Contents
Foreword.
PART ONE: INTRODUCTION AND KEY THEMES.
CHAPTER 1: Introduction and Executive Summary
"How Can My Team Do Better Than the Averages?" 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 TWO: STRATEGY AND THE ORIGINATION OF TRANSACTION PROPOSALS.
CHAPTER 4: M&A Activity
M&A Activity Appears in Waves. Explanations of M&A Activity. "Creative Destruction" 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 "View."
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 THREE: DILLGENCE, VALUATION, AND ACCOUNTING.
CHAPTER 8: Due Diligence
The Concept of Due Diligence. Principles and Strategies. Timing, Team, and Outputs. The Target's 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--It Helps to "Have a View." Rule #5: Exercise Estimators of Intrinsic Value to Find Key Value Drivers
and Bets. Rule #6: Think Critically; 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 "Whole Deal" 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 FOUR: DESIGN OF DETAILD 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 "Whole Deal" 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 "Win-Win" 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 "Win-Win" Zone.
CHAPTER 22: Structuring and Valuing Contingent Payments in M&A
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. 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 FIVE: 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 Agreement. Disclosures to Investors and Regulators. Gaining
Approval. Case Study: Daimler-Benz and Chrysler.
CHAPTER 26: Governance in M&A: The Board of Directors and Shareholder Voting
Governing Well Is Hard to Do. Good Governance Pays. How Shareholders Rule. Fiduciary Duties of Target Directors
in Considering M&A. Preparing for the Board's Review of a Deal. How Can Firms Be Governed Better?
CHAPTER 27: Rules of the Road: Securities Law, Issuance Process, Disclosure, and Insider Trading
Overview of Key Securities Laws and Rules. International Law Comparison. Disclosures. Insider Trading. Observance
of Deal Process.
CHAPTER 28: Rules of the Road: Antitrust Law
Antitrust Law: History and Motives. How Antitrust Regulators and Laws Affect M&A. U.S. Antitrust Merger
Guidelines. Premerger Review Process in the United States. Antitrust Regulation of M&A in the European Union.
Critical Perspectives on Antitrust Policy.
CHAPTER 29: Documenting the M&A Deal
First-Round Documents. Definitive Agreement. Merger Proxy Statement and Prospectus.
PART SIX: COMPETITION, HOSTILITY, AND BEHAVIORAL EFFECTS IN M&A.
CHAPTER 30: Negotiating the Deal
The Relevance of Negotiation Process. Behavioral Finance. Influencing Bargaining Outcomes: An Overview of the
Challenge. How to Prepare for a Negotiation. Managing the Negotiation Process Proactively.
CHAPTER 31: Auctions in M&A
Auction Structures and Motives. Advantages and Disadvantages of Auctions. Auctions in Practice: The Case of
RJR Nabisco. The "Winner's Curse" in M&A: Is It Real? Some Practical Advice to Sellers in Auctions.
CHAPTER 32: Hostile Takeovers: Preparing a Bid in Light of Competition and Arbitrage
Takeovers Are Games. A Profile of Hostile Takeovers. Beware of the Players, Both on the Field and Off. The Arb
Is the Consummate Economic Actor. Interpreting Arbitrage Spreads. The Arb Assesses a Recapitalization Proposal
in Terms of Blended Value. Government Constraints on the Game. Selling Shareholders Face a Prisoner's Dilemma.
To Set a Bid Price: Think Like an Investor. The Game Has Implications for Design and Defense of Takeovers.
CHAPTER 33: Takeover Attack and Defense
The Prevalence of Antitakeover Defenses. Profile of the Target of a Hostile Bid. Optionality in Takeover Attack
and Defense. Tactics of Takeover Attack. Tactics of Takeover Defense. Implications for the Practitioner.
CHAPTER 34: The Leveraged Restructuring as a Takeover Defense: The Case of American Standard
The American Standard Case. The Response. Of Parachutes, Pills, and Litigation. Restructuring Defenses. When
Does a Restructuring Make Sense?
PART SEVEN: COMMUNICATION, INTEGRATION, AND BEST PRACTICE.
CHAPTER 35: Communicating the Deal: Gaining Mandates, Approvals, and Support
Core Challenges to Effective Communication. Some Guiding Principles for Communicating the Deal. Presenting the
"Concept Proposal." Communicating the Deal to the Board for Approval. Communicating with Employees. Announcing
the Deal to the Public.
CHAPTER 36: Framework for Postmerger Integration
Integration Strategy. Implementation of Integration Strategy. The Case of Union Bank of Switzerland and Swiss
Bank Corporation. Integration as Transformation.
CHAPTER 37: Corporate Development as a Strategic Capability: The Approach of GE Power Systems
Business Development at GE Power Systems. Deal Process at GE Power Systems. The M&A "Factory":
Operationalizing Business Development. Implications for Best Practice.
CHAPTER 38: M&A "Best Practices": Some Lessons and Next Steps
Some Elements of M&A Best Practice. Where the Sidewalk Ends. Developing Best Practitioners. The End of It
All.
About the CD-ROM.
References and Suggestions for Further Reading.
Index.