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Practitioner's Complete Guide to M&As: An All-Inclusive Reference, with Website

Book Description

The ultimate guide to the ins and out of mergers and acquisitions

Practitioner's Complete Guide to M&As provides the practical tricks of the trade on M&As: what they need to know, what they have to know, and what they need to do. Numerous examples and forms are included illustrating concepts in discussion.

  • Written in a straight-talking style

  • A highly, practical application-oriented guide to mergers and acquisitions

  • Covers strategy development; deal flow and target identification; due diligence; valuation and offers; tax structuring; negotiation; and integration and value creation"

  • Presents information using bullet points rather than lengthy narrative for ease of reading

  • Numerous exhibits, forms, and examples are included

This practical guide takes you through every step of the M&A process, providing all the necessary tools that both the first-time M&A player as well as the seasoned practitioner need to complete a smart transaction.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Preface
  6. Acknowledgments
  7. Topic 1: Strategy Development, Then M&A
    1. M&A IS ONE OF MANY BUSINESS DEVELOPMENT OPTIONS
    2. STAGES INVOLVED IN THE STRATEGIC PLANNING PROCESS
    3. STRATEGY DEVELOPMENT—WHERE AND HOW TO CREATE VALUE
    4. WHERE—IDENTIFY CUSTOMER'S INITIATIVES AND ATTRACTIVE MARKET SPACES
    5. HOW—IDENTIFY YOUR ACTIVITIES AND CAPABILITIES—EXTEND THEM
    6. HOW—IDENTIFY YOUR CAPABILITY GAPS VS. MARKET AND PRODUCT REQUIREMENTS
    7. HOW—IDENTIFY YOUR CAPABILITY GAPS VS. COMPETITION
    8. HOW—DEFINE ATTRACTIVE MARKET CRITERIA, RATE MARKETS, CLOSE GAPS
    9. HOW—IF M&A IS VEHICLE TO CLOSE GAPS, IDENTIFY TARGETS
  8. Topic 2: M&A Process: Front to Back
    1. DEFINITION OF THE M&A PROCESS
  9. Topic 3: Why M&A?
    1. DEFINE THE ROLE AND GOAL FOR M&A
    2. LOOK FOR CAPABILITY OVERLAPS WITH TARGETS TO BALANCE ACQUISITION RISK
  10. Topic 4: Deal Criteria
    1. DEAL CRITERIA DEVELOPMENT
    2. CRITERIA RATING ENGINE
    3. CONCLUSION TO THE CRITERIA RATING ENGINE
    4. WHERE DOES TARGET FALL ON COMPETITIVE CONTINUUM?
  11. Topic 5: Deal Sourcing
    1. POTENTIAL SOURCES, PROS AND CONS
  12. Topic 6: Fees for Services
    1. OVERVIEW
    2. FEE STRUCTURES: AN OVERVIEW
    3. BUY-SIDE BANKER FEE ARRANGEMENTS
    4. BUY-SIDE BANKER FEE ILLUSTRATION
  13. Topic 7: Financial and Strategic Buyers
    1. FINANCIAL BUYERS
    2. STRATEGIC BUYERS
  14. Topic 8: How Long Will It Take to Complete the Deal?
    1. DEAL ISSUES TAKE TIME
  15. Topic 9: Confidentiality Agreements
    1. ENTER INTO CONFIDENTIALITY AGREEMENTS EARLY
    2. DISCUSSION BETWEEN COMPETITORS REQUIRES GREAT CARE
    3. USE A FIREWALL
  16. Topic 10: “Concern Capture” Due Diligence
    1. DESCRIPTION OF THE DUE DILIGENCE PROCESS
    2. PHASE ONE: PRELIMINARY DILIGENCE
    3. PHASE TWO: DETAIL DUE DILIGENCE
    4. IDENTIFY NON-NORMATIVE TRENDS AND BEHAVIOR
    5. BUSINESS DRIVER ASSESSMENT ENGINE—DETERMINE STRENGTH OF INCOME DRIVERS
    6. VALUATION DRIVER ASSESSMENT ENGINE-DETERMINE STRENGTH OF VALUATION DRIVERS
    7. CONCLUSION
  17. Topic 11: Keep Deal Conversations Quiet
    1. WHAT TO DO WHEN IT LEAKS OUT
  18. Topic 12: Auctions
    1. FEAR IS A COMPELLING DRIVER TO AUCTION SUCCESS
    2. AUCTION PROCESS—BID SOLICITATION
    3. AUCTION PROCESS—INVITATION TO BID
    4. AUCTION PROCESS—FIRST ROUND CONDITIONAL OFFER
    5. AUCTION PROCESS—MANAGEMENT PRESENTATION, DUE DILIGENCE, MORE BID ROUNDS
    6. AUCTION PROCESS—SELECT A WINNER
    7. PREEMPTIVE OFFERS
    8. AUCTION PROCESS—GRANT EXCLUSIVITY
    9. FAILED AUCTIONS
    10. AN AUCTION BIDDING STRATEGY
    11. BEWARE OF THE CRAZIES
  19. Topic 13: Seller's Prospectus
    1. CONTENTS OF THE SELLING DOCUMENT
  20. Topic 14: Pay for Inherent Capabilities Only
    1. THE BASKET OF CAPABILTIES ACQUIRED HAS A FINITE LIFE AND VALUE
    2. SELLER PROJECTIONS OFTEN COMINGLE CURRENT AND FUTURE CAPABILITIES
    3. PAY ONLY FOR EXISTING VALUE POTENTIAL
  21. Topic 15: Platform Value
    1. WHAT IS IT, HOW MUCH IS IT WORTH
    2. THE REAL OPTION APPROACH TO PLATFORM VALUATION
  22. Topic 16: Buyer and Seller Value Perspectives
    1. WHAT IS THE OTHER SIDE THINKING THE VALUE OF THE BUSINESS IS?
  23. Topic 17: Integration Initiatives Will Determine Deal Value
    1. KNOW WHAT YOU ARE GOING TO DO TO CREATE ADDED VALUE IN YOUR DEAL
  24. Topic 18: Unlock Hidden Value: The Lean Enterprise
    1. EVALUATE LEAN OPPORTUNITIES DURING DUE DILIGENCE
    2. STAPLE YOURSELF TO AN ORDER
    3. CONCLUSION
  25. Topic 19: The Real Deal: Lean
    1. LEAN ENTERPRISE OVERVIEW: IDENTIFY THE NON-VALUE-ADDED ACTIVITIES
    2. ONE-PIECE FLOW IS THE GOAL
    3. CONCLUSION
  26. Topic 20: Valuation: An Introduction
    1. VALUATION CONSIDERATIONS AND METHODS OVERVIEW
    2. COMPARABLE METHODS: MARKET APPROACH OVERVIEW
    3. CAPITALIZATION OF BENEFITS METHOD OVERVIEW
    4. DISCOUNTED CASH FLOW METHOD
  27. Topic 21: Discounted Cash Flow: An Introduction
    1. DCF—INTRODUCTION, ADVANTAGE, DISADVANTAGE
    2. COMPOUNDING
    3. DISCOUNTING
    4. DISCOUNTED CASH FLOW
  28. Topic 22: Free Cash Flow
    1. FCF DEFINED
    2. FCF DETERMINATION
    3. WHILE THE ELEMENTS OF FCF ARE SOMETIMES RESTATED TO MEASURE ROI, THERE IS NO EFFECT ON FCF
    4. CONCLUSION
  29. Topic 23: Fair Return on a Deal
    1. FAIR RETURN
    2. CAPITAL ASSET PRICING MODEL
    3. SECURITY MARKET LINE
    4. COSTS OF CAPITAL DEFINED AND USES: CU, CL, I, AND C*
    5. VALUATION RISKS
    6. OTHER METHODS OF RETURN ON EQUITY ESTIMATION
    7. CAPM CALCULATION
    8. TREATMENT OF INHERENT VOLATILITY FROM UNSYSTEMATIC RISK IN VALUATIONS
    9. INTERNATIONAL COST OF EQUITY CAPITAL—OVERVIEW
  30. Topic 24: Risk-Free Rates
    1. RISK-FREE RATE DEFINED
  31. Topic 25: Equity Risk Premiums
    1. EQUITY RISK PREMIUM DEFINED
  32. Topic 26: What Is Business Risk?
    1. BUSINESS RISK IN M&A DEFINED
    2. CONTROL AND RISK MANAGEMENT EMANATES FROM KNOWLEDGE OVERLAPS
  33. Topic 27: Entropy: Tendency toward Negative Variation
    1. ENTROPY DEFINED
    2. ENTROPY IN M&A DEALS
  34. Topic 28: Equity Investor Risk
    1. OVERVIEW
  35. Topic 29: Beta
    1. BETA IS AND IS NOT
    2. DEBATE OVER BETA
  36. Topic 30: Systematic Risk
    1. SYSTEMATIC RISK DEFINED
  37. Topic 31: Unsystematic Risk
    1. UNSYSTEMATIC RISK DEFINED
  38. Topic 32: Beta with or without Debt
    1. OVERVIEW
  39. Topic 33: Beta: Levered or Unlevered
    1. GATHERING APPLICABLE AND COMPARABLE BETAS
    2. DELEVERAGING LEVERED BETAS AND DEVELOPING A COMPARABLE UNLEVERED BETA FOR THE TARGET
    3. TO RELEVER AN UNLEVERED ASSET BETA
  40. Topic 34: Beta Application in Determination of CU
  41. Topic 35: Levered Beta Moves as Debt to Equity Moves
    1. LEVERED BETA IN A WORLD WITHOUT TAXES
    2. LEVERED BETA IN A WORLD WITH TAXES
  42. Topic 36: Size Premium
    1. SIZE PREMIUMS ARE INVERSELY RELATED TO FIRM SIZE
  43. Topic 37: Weighted Average Cost of Capital
    1. INTRODUCTION TO WEIGHTED AVERAGE COST OF CAPITAL
    2. WEIGHTED AVERAGE METHOD OF C* DETERMINATION
    3. DIRECT METHOD OF C* DETERMINATION
    4. ADJUSTED DIRECT METHOD OF C* DETERMINATION
  44. Topic 38: Terminal Values, Terminal Value Multiples, and Terminal Value DCFs
    1. TERMINAL VALUE DEFINITION
    2. OVERSTATING TERMINAL VALUES IS A DEAL VALUATION RISK
    3. TERMINAL VALUE DETERMINATION METHODS
    4. PERPETUITY GROWTH CAPITALIZATION METHOD
    5. DISCOUNTED FREE CASH FLOW INTO PERPETUITY METHOD
    6. DISCOUNTING THE TERMINAL VALUE AMOUNT AT THE END OF YEAR T
    7. LIQUIDATION OF ASSETS TERMINAL VALUE METHOD
  45. Topic 39: Discounted Cash Flow Valuation Illustrated
    1. DCF VALUATION PROCESS
    2. OFFER DETERMINATION PROCESS
  46. Topic 40: Leverage: The Real Deal
    1. LEVERAGE INCREASES DEAL VALUATIONS
    2. CONCLUSION
  47. Topic 41: Debt Limits
    1. THE PRACTICAL LENDING LIMIT IS UP TO LENDERS
  48. Topic 42: Debt Adds Value: The Derivation of Dt
    1. DERIVATION OF DT AND TAX ADVANTAGE OF A FIXED LEVEL OF DEBT
    2. TAX ADVANTAGE OF DEBT WITH A VARYING LEVEL OF DEBT
    3. DEBT ADVANTAGE IN M&A TRANSACTIONS
  49. Topic 43: The Leveraged Buyout; Definition and Valuation
    1. LBO DEFINED
    2. LBO VALUATION OVERVIEW
    3. DEBT LEVELS EMPLOYED
    4. RECAPITALIZATIONS AND EQUITY INVESTORS’ END GAME
    5. LEVERAGED BUYOUT CAPITAL STRUCTURE AND COMPANY CHARACTERISTICS
  50. Topic 44: Valuing the Leveraged Buyout
    1. STEPS TO VALUE THE LBO
    2. STEPS TO DETERMINE LBO OFFER
    3. BENEFIT OF USING DEBT VERSUS NO DEBT ON ENTERPRISE VALUE AND OFFERS
    4. LBO OFFERS EQUAL THE EQUITY INVESTED PLUS THE DEBT
    5. FINAL NOTE ON THE VALUE PAID IN LEVERAGED BUYOUTS
  51. Topic 45: Real Option Valuation: An Introduction
    1. DEFINITION AND DEEPER VALUE OF REAL OPTIONS
    2. REAL OPTIONS VALUATION AND DISCOUNTED CASH FLOW VALUATION
    3. UNDERSTANDING THE RESULT FROM A REAL OPTION VALUATION
    4. FORMS OF REAL OPTIONS AND VALUATION DETERMINATION METHODS
    5. REAL OPTION APPLICATIONS IN M&A
  52. Topic 46: Real Option Valuation: Application and Illustration
    1. OVERVIEW
    2. REAL OPTION VALUATION: AN EXAMPLE
    3. NPV APPROACH
    4. ILLUSTRATION OF ELEMENTS OF REAL OPTION APPROACH
    5. INTERPRETATION OF THE REAL OPTION RESULT
    6. USING THE MODIFIED BLACK-SCHOLES REAL OPTION MODEL
    7. REVIEW THE TOLLING ARRANGEMENT AND OPTION VALUE AT THE END OF THE FIRST YEAR: IF LOWER VOLATILITY IS EXPECTED
    8. REVIEW THE TOLLING ARRANGEMENT AND OPTION VALUE AT THE END OF THE FIRST YEAR: IF HIGHER VOLATILITY IS EXPECTED
    9. CONCLUDING REMARKS ON REAL OPTION VALUATION
  53. Topic 47: M&A Values Are Not All the Same
    1. INVESTMENT VALUE
    2. CONTROL VALUE
    3. FAIR MARKET VALUE
    4. ENTERPRISE VALUE
    5. EQUITY VALUE
    6. MINORITY VALUE
    7. OFFER VALUE
    8. TRANSACTION VALUE
    9. NET REALIZED SELLER VALUE
  54. Topic 48: Discounts and Premiums
    1. ACQUISITION PREMIUMS
    2. CONTROL PREMIUMS
    3. MINORITY DISCOUNTS
    4. MARKETABILITY (OR LIQUIDITY) DISCOUNTS
    5. KEY MAN DISCOUNTS
    6. CONGLOMERATE DISCOUNTS
    7. FUZZY LOGIC BETWEEN DISCOUNTS AND VALUATION LEVELS EXAMPLE
  55. Topic 49: Discounted Cash Flow Valuations: Minority or Control
    1. DCF VALUATIONS
    2. DCF VALUATIONS OF PRIVATELY HELD COMPANIES IN ACQUISITIONS
  56. Topic 50: Inflation in DCF Valuations
    1. INCLUDE INFLATION IMPACTS IN DCF VALUATION
  57. Topic 51: Integration, Alignment, and Synergy Benefits: Plan It Out
    1. THE STEPS TO DEVELOP THE INTEGRATION PLAN
  58. Topic 52: Integration, Alignment, and Valuing Synergy Benefits
    1. INTRODUCTION-INTEGRATION PLANNING, SYNERGY EVALUATION
    2. KEY SUBJECT AREAS REQUIRING ATTENTION
    3. STRATEGY ALIGNMENT, DEVELOPMENT, AND BUY-IN
    4. ORGANIZATIONAL DESIGN, MANAGEMENT, CULTURE, AND POLICY
    5. COMMUNICATION
    6. CAPACITY, R&D PROJECT, AND FACILITY SELECTION DESIGN
    7. OTHER FACILITY SYNERGY DESIGN
    8. BUSINESS AND SUPPORT FUNCTION SYNERGY DESIGN
    9. MARKET, CUSTOMER-BASED SYNERGIES
    10. TECHNOLOGY, INTELLECTUAL PROPERTY, AND R&D
    11. INFORMATION TECHNOLOGY
  59. Topic 53: Venture Capital Valuation
    1. VC INVESTOR INTERESTS, RETURN TARGETS: AN EXAMPLE
  60. Topic 54: Discount Rates and Valuing Free Cash Flow
    1. OVERVIEW
    2. YEAR-END DISCOUNT RATES
    3. BEGINNING-OF-YEAR DISCOUNT RATES
    4. MIDYEAR DISCOUNT RATES
    5. QUARTERLY DISCOUNT RATES
    6. MONTHLY DISCOUNT RATES
    7. DAILY DISCOUNT RATES
    8. CONTINUOUS DISCOUNT RATES
    9. SUMMARY
  61. Topic 55: Growth, C*, and Return: The Engine to Increased Valuations and Deferred Tax Advantage
    1. INTERDEPENDENCIES AMONG GROWTH, RATE OF RETURN, AND COST OF CAPITAL
    2. GROWTH ALSO CREATES A POTENTIAL DEFERRED TAX OPPORTUNITY
  62. Topic 56: How Fast Can the Target Grow?
  63. Topic 57: Cash Flow Multiples, Growth Rates, and Discount Rates
    1. LAGGING FREE CASH FLOW MULTIPLES, END-OF-YEAR BASIS, NO GROWTH
    2. LAGGING FREE CASH FLOW MULTIPLES, MIDYEAR BASIS, NO GROWTH
    3. FACTOR TO CONVERT END-OF-YEAR BASIS MULTIPLES TO MIDYEAR'S BASIS
    4. LAGGING FREE CASH FLOW MULTIPLES, END-OF-YEAR BASIS, WITH GROWTH
    5. DISCOUNTED RATE ADJUSTED GROWTH RATE METHOD TO DETERMINE FCFM
    6. DERIVATION OF GD IN THE DISCOUNTED RATE ADJUSTED GROWTH RATE METHOD
    7. METHOD FOR DETERMINING AN APPROXIMATION OF GD AND FCFM
    8. IMPACT OF NOT USING GD IN FCFM MULTIPLE CONSTRUCTION
    9. DERIVE FCFM, C*, OR GD FROM EITHER OF THE OTHER TWO TERMS
    10. SPIDER CHART METHOD FOR VISUAL EXPLANATION OF THE CONSTRUCTION OF C* AND FCFM
    11. DERIVATION OF PRICE EARNINGS AND OTHER MULTIPLES FROM FCFM
  64. Topic 58: Comparable Multiples
    1. “COMPARABLE” MULTIPLES ARE NOT COMPARABLE UNTIL THEY ARE ADJUSTED
    2. “COMPARABLE” MULTIPLE ADJUSTMENT PROCESS
    3. DEVELOP COMPONENT RECONCILIATION OF COMPARABLE COMPANY TO TARGET FCFM
    4. CONCLUSION
    5. USE OF THE ADJUSTED FCFM
  65. Topic 59: Converting FCFM to P/Es and Other Valuation Multiples and Deriving Slot Multiples for Public Companies
    1. UNDERSTAND THE SUSTAINABLE RELATIONSHIPS BETWEEN FCF AND OTHER EARNINGS FUNDAMENTALS
    2. DERIVATION FORMULA TO CONVERT FROM FCFM TO OTHER VALUATION MULTIPLES AND VICE VERSA
    3. VISUAL CONVERSION OF FCFM TO EBITDAM
    4. USE THE P/E EVISCERATOR TO VALIDATE P/E TRADING MULTIPLES OF PUBLIC COMPANIES
    5. P/E EVISCERATOR APPLIED TO THE ILLUSTRATION IN TOPIC 60
    6. P/E EVISCERATOR APPLIED TO COCA-COLA COMPANY AS OF OCTOBER 31, 2007
    7. IMPLICIT PE, FCFM VERSUS DERIVED SLOT P/E, FCFM, AND GD
    8. VARIANCE IN SLOT RESULTS IF ASSUMPTIONS ARE SENSITIZED
    9. CONCLUSION ON KO P/E
    10. THE VALUE-CREATION POTENTIAL INDEX FOR KO
    11. P/E EVISCERATOR APPLIED TO GOOGLE INC. AS OF NOVEMBER 1, 2007
    12. IMPLICIT P/E, FCFM VERSUS DERIVED SLOT P/E, FCFM, AND GD
    13. VARIANCE IN SLOT RESULTS IF ASSUMPTIONS ARE SENSITIZED
    14. CONCLUSION ON GOOG P/E
    15. THE VALUE CREATION STRENGTH INDEX FOR GOOG
    16. CONCLUSION: P/E EVISCERATOR
    17. GRAPHS OF APPROXIMATE SMALL- AND LARGE-COMPANY FREE CASH FLOW AND EBITDA MULTIPLES OVER A RANGE OF GROWTH
  66. Topic 60: EBITDA Valuation Engine
    1. EBITDA ENGINE OVERVIEW—A SHORTHAND VALUATION METHOD
    2. EBITDA ENGINE EXPLAINED
    3. VALUE OF GROWTH DURING T
    4. EBITDA ENGINE VALUATION EXAMPLE
    5. COMPARISON OF EBITDA ENGINE VALUATION RESULTS WITH OTHER METHODS
    6. SPIDER CHART PRESENTATION OF THE EBITDA ENGINE ILLUSTRATION OF APPENDIX 60.2
    7. A FINAL NOTE ON VALUATIONS
  67. Topic 61: Free Cash Flow Equivalent Impacts for Arbitrary Adjustments to Discount Rates
    1. ARBITRARY ADJUSTMENTS DISCUSSION
  68. Topic 62: Transferring Defined Benefit Pension Plan Liability Issues
    1. INTRODUCTION
    2. BUYER'S VALUATION OF PENSION LIABILITY
    3. PROJECTED BENEFIT OBLIGATION BASIS FOR LIABILITY VALUATION
    4. ACCUMULATED BENEFIT OBLIGATION BASIS FOR LIABILITY VALUATION
    5. PROJECTED TERMINATION BASIS FOR LIABILITY VALUATION
    6. SELLER'S VALUATION OF PENSION LIABILITY
    7. GOING-CONCERN BASIS FOR LIABILITY VALUATION
    8. NEGOTIATED VALUATION OF PENSION LIABILITY
    9. PENSION ASSET TRANSFER ISSUES
    10. BENEFIT TRANSFER ISSUES
  69. Topic 63: Environmental Remediation Expenses
    1. OVERVIEW
  70. Topic 64: Environmental Insurance
    1. GENERAL TERMS OF ENVIRONMENTAL INSURANCE
    2. POLLUTION LEGAL LIABILITY INSURANCE
    3. IF BUYER ACQUIRES AN ACTIVE KNOWN ENVIRONMENTAL ISSUE
  71. Topic 65: Management Warrant Incentive Plans
    1. MANAGEMENT WARRANT INCENTIVE PLAN DESCRIPTION
    2. WARRANT PLAN ILLUSTRATION
  72. Topic 66: Negotiation: Introduction and Overview
    1. OVERVIEW OF NEGOTIATION CONSIDERATIONS AND CONDUCT GUIDELINES
  73. Topic 67: Negotiation: Values, Offers, Prices, and Risk Assumption
    1. DRIVERS OF THE DESIRED AND ACCEPTABLE TOTAL CONSIDERATION FRONTIER
    2. DRIVERS OF THE ACTUAL TOTAL CONSIDERATION FRONTIER
  74. Topic 68: Negotiation: Offer Content
    1. THE COMPLETE OFFER: KNOW WHERE YOU WANT TO END UP BEFORE YOU GET STARTED
  75. Topic 69: Negotiation: Create Space in Your Ideas
    1. OVERVIEW
  76. Topic 70: Negotiation: Beware of the Emotions of Private Sellers
    1. OVERVIEW
  77. Topic 71: Negotiation: Imprint; Do Not Lecture
    1. IMPRINT, CAREFULLY
  78. Topic 72: Negotiation: Handling Tight Spots
    1. A PRIMER ON HANDLING TIGHT SPOTS
  79. Topic 73: Negotiation: Closing the Bid-Ask Negotiating Gap
    1. MANAGING AND WORKING THROUGH THE GAP
    2. WALK OUT IF NECESSARY, BUT KEEP TALKING
    3. CONTRACTUAL CONDITIONS APPORTION FINAL RISK POSITIONS—WORK THEM HARD DURING NEGOTIATIONS
  80. Topic 74: Negotiation: Be Aware of Leverage and Deal Momentum Shift
    1. LEVERAGE: IF YOU HAVE IT, USE IT (APPROPRIATELY)
    2. BEWARE OF EXTORTION
    3. DEAL MOMENTUM SHIFTS AS A DEAL PROGRESSES
  81. Topic 75: Negotiation in the Final Stages
    1. THE LOBBED OFFER STAGE
    2. STEP BACK WHEN YOU ARE READY TO SHAKE HANDS
  82. Topic 76: Negotiation: Use Earn-Outs or Noncompete Agreements to Close a Bid-Ask Gap
    1. WHY DO AN EARN-OUT?
    2. EARN-OUT PERFORMANCE PAYMENTS
    3. TAX CONSIDERATIONS OF EARN-OUTS
    4. AN EARN-OUT EXAMPLE
    5. EARN-OUT CONCLUSION
    6. NONCOMPETE AND CONSULTING AGREEMENTS
  83. Topic 77: Negotiation: After the Deal Is Agreed
    1. HEADS OF AGREEMENT AND WHAT TO INCLUDE IN IT
  84. Topic 78: Negotiation: Bluffing and How to Handle It
    1. THE FOUR COURSES OF ACTION WHEN YOUR BLUFF IS CALLED
    2. ROLL OVER
    3. NO WAY, BUT
    4. YOU TALKING TO ME?
    5. BLUFF AND TURN
  85. Topic 79: Negotiation: When Do You Step Away?
    1. FOR BUYERS
    2. FOR SELLERS
  86. Topic 80: Negotiation: When Do You Proceed?
    1. FOR BUYERS
    2. FOR SELLERS
  87. Topic 81: Negotiation: Do a Time Capsule
    1. THE TIME CAPSULE
  88. Topic 82: Negotiation: Build Trust to Get Closed
    1. HOW TO CREATE TRUST
    2. LET YOUR NEGOTIATING BEHAVIOR BE GUIDED BY YOUR DAILY SPIRITUAL NEEDS
    3. HOW TO HANDLE THE BULLY
  89. Topic 83: Exits under Duress: Have a Plan if the Deal Does Not Work
    1. HAVE AN EXIT PLAN
  90. Topic 84: Structuring the Deal: An Overview
    1. DEAL STRUCTURES AND LEGAL AND TAX IMPLICATIONS
    2. FRONTIERS OF TRANSACTION ACCEPTANCE
    3. DEAL-STRUCTURING CONSIDERATIONS AND TRADE-OFF OPTIONS
    4. GENERAL TAX CONSEQUENCES ASSOCIATED WITH DEAL-RELATED EXPENSES
    5. CONTRACTUAL CONDITIONS LIMIT AND APPORTION FINAL RISK ASSUMPTION POSITIONS—WORK THEM
  91. Topic 85: Structuring the Deal: Asset Step-Ups, Noncompete, and Synergy Valuation Engines
    1. VALUATION OF ASSET TAX BASIS STEP-UPS
    2. FIXED ASSET STEP-UP VALUATION
    3. INVENTORY STEP-UP VALUATION
    4. NONCOMPETE VALUATION
    5. SYNERGY VALUATION
    6. SYNERGY VALUATION USING THE REAL OPTION MODEL
  92. Topic 86: Total Shareholder Return
    1. TOTAL SHAREHOLDER RETURN DEFINED
    2. CALCULATION OF TSR
  93. Topic 87: Stakeholder Value Creation
    1. SATISFY THE CUSTOMER AND EMPLOYEES
    2. SATISFY THE SHAREHOLDER THROUGH VALUE CREATION
  94. Topic 88: EVAquity: Align Shareholder and Management Interests
    1. EVAQUITY INCENTIVE PLAN OVERVIEW
    2. EVAQUITY PLAN TERMS
    3. EVAQUITY PLAN EXAMPLE: PROSPECTIVE PLAN
    4. EVAQUITY PLAN EXAMPLE: AFTER TWO YEARS’ ACTUAL RESULTS
  95. Topic 89: Letter of Intent
    1. INTRODUCTION TO THE LOI
  96. Topic 90: Purchase and Sale Agreement
    1. INTRODUCTION TO THE PSA
  97. Topic 91: Purchase and Sale Agreement: Explanation by Section
    1. PARTIES, DEFINITIONS, PURCHASE, AND SALE
    2. PURCHASE PRICE AND ADJUSTMENTS, COVENANTS PRIOR TO CLOSING
    3. REPRESENTATIONS AND WARRANTIES OF THE SELLER, INTRODUCTION
    4. REPRESENTATIONS AND WARRANTIES OF THE SELLER
    5. REPRESENTATIONS AND WARRANTIES OF THE BUYER
    6. CONDITIONS TO CLOSING, CLOSING AND DELIVERIES AT THE CLOSING
    7. POSTCLOSING COVENANTS, INDEMNIFICATION, SURVIVAL OF REPRESENTATIONS, AND WARRANTIES
    8. INDEMNIFICATION PROCEDURE
    9. OTHER PROVISIONS
  98. Topic 92: Purchase Price Adjustments for Working Capital
    1. TARGET AND ACTUAL WORKING CAPITAL DETERMINATION
    2. THE CLOSING WORKING CAPITAL ADJUSTMENT—A ZERO-SUM EVENT
    3. SOMETIMES THE WORKING CAPITAL ADJUSTMENT IS NOT A ZERO-SUM EVENT
    4. WORKING CAPITAL COLLARS
  99. Topic 93: Indemnification and Survival Provisions
    1. INTRODUCTION
    2. INDEMNITY PROVISIONS, CAPS, BASKETS, DURATIONS
    3. USE A MATRIX TO SORT OUT INDEMNITY PROVISIONS
    4. CONTRACTUAL CONDITIONS APPORTION FINAL RISK POSITIONS—WORK THEM HARD DURING NEGOTIATIONS
  100. Topic 94: Escrows
    1. INTRODUCTION
  101. Topic 95: Joint Venture Transaction: Valuation and Structuring Overview
    1. WHY DO A JOINT VENTURE
    2. WHO CONTROLS THE JOINT VENTURE
    3. LETTER OF INTENT AND PARTNERSHIP AGREEMENT
    4. JV FORMATION AGREEMENT
    5. TECHNOLOGY LICENSE AGREEMENTS
    6. SUPPLY AGREEMENTS
    7. DISTRIBUTION AGREEMENTS
    8. OTHER AGREEMENTS
    9. JV VALUATION AND SHAREHOLDER EQUITY CONTRIBUTION TO THE JV
  102. Topic 96: Why Deals Go Bad
    1. WHY DEALS GO BAD OR DO NOT WORK OUT
    2. WHAT HAS TO HAPPEN TO AVOID BAD DEALS
  103. Topic 97: After the Deal: Do a Deal Bible
    1. DEAL BIBLE DEFINED
  104. Topic 98: Do the Audits of the Integration and Deal Value Creation Plan
    1. AUDIT THE INTEGRATION PLAN: ARE YOU GETTING THERE?
    2. AUDIT THE DEAL VALUE CREATION: WHAT DID YOU LEARN?
  105. About the Web Site
  106. Index