You are previewing The Art of Capital Restructuring: Creating Shareholder Value through Mergers and Acquisitions.
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The Art of Capital Restructuring: Creating Shareholder Value through Mergers and Acquisitions

Book Description

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.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Acknowledgments
  6. Chapter 1: Mergers, Acquisitions, and Corporate Restructuring: An Overview
    1. INTRODUCTION
    2. PURPOSE OF THE BOOK
    3. DISTINGUISHING FEATURES OF THE BOOK
    4. INTENDED AUDIENCE FOR THE BOOK
    5. STRUCTURE OF THE BOOK
    6. SUMMARY AND CONCLUSIONS
    7. ABOUT THE AUTHORS
  7. Part I: Background
    1. Chapter 2: Merger Waves
      1. INTRODUCTION
      2. MERGER MOTIVES
      3. MERGER WAVES
      4. DISCUSSION AND NEW DIRECTIONS
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHOR
    2. Chapter 3: Takeover Regulation
      1. INTRODUCTION
      2. THE FUNCTIONS OF TAKEOVER REGULATION
      3. TAKEOVER REGULATION PROVISIONS
      4. SUMMARY AND CONCLUSIONS
      5. DISCUSSION QUESTIONS
      6. REFERENCES
      7. ABOUT THE AUTHORS
    3. Chapter 4: Corporate Governance and M&As
      1. INTRODUCTION
      2. M&AS AS A MANAGERIAL DISCIPLINARY DEVICE
      3. CORPORATE GOVERNANCE AND ACQUIRER WEALTH EFFECTS
      4. THE MARKET FOR CORPORATE CONTROL
      5. PRODUCT MARKET COMPETITION
      6. BOARD CHARACTERISTICS
      7. MANAGERIAL EQUITY INCENTIVES
      8. INSTITUTIONAL OWNERSHIP
      9. MONITORING BY INDIVIDUAL BLOCKHOLDERS
      10. LEVERAGE AND CREDITOR CONTROL
      11. CORPORATE GOVERNANCE AND TARGET WEALTH EFFECTS
      12. CORPORATE GOVERNANCE AND ACQUIRER-TARGET COMBINED RETURNS
      13. SUMMARY AND CONCLUSIONS
      14. DISCUSSION QUESTIONS
      15. REFERENCES
      16. ABOUT THE AUTHOR
    4. Chapter 5: Ethical and Social Issues in M&As
      1. INTRODUCTION
      2. APPLYING ETHICAL PRINCIPLES
      3. MERGERS AND ACQUISITIONS
      4. SUMMARY AND CONCLUSIONS
      5. DISCUSSION QUESTIONS
      6. REFERENCES
      7. ABOUT THE AUTHOR
    5. Chapter 6: Theoretical Issues on Mergers, Acquisitions, and Divestitures
      1. INTRODUCTION
      2. THEORETICAL ISSUES FOR MERGERS, ACQUISITIONS, AND DIVESTITURES
      3. THEORETICAL ISSUES MOTIVATING CORPORATE DIVESTITURES
      4. SUMMARY AND CONCLUSIONS
      5. DISCUSSION QUESTIONS
      6. REFERENCES
      7. ABOUT THE AUTHOR
    6. Chapter 7: The Short-Term and Long-Term Performance of M&As
      1. INTRODUCTION
      2. SHORT-TERM PERFORMANCE OF TARGET AND ACQUIRING FIRMS
      3. LONG-TERM STOCK RETURN PERFORMANCE OF ACQUIRING FIRMS
      4. LONG-TERM OPERATING PERFORMANCE OF ACQUIRING FIRMS
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHORS
  8. Part II: Valuation
    1. Chapter 8: Standard Valuation Methods for M&As
      1. INTRODUCTION
      2. BALANCE SHEET–BASED METHODS
      3. INCOME STATEMENT–BASED METHODS
      4. OTHER MULTIPLES
      5. DISCOUNTED CASH FLOW METHODS
      6. CALCULATING THE VALUE OF A COMPANY USING FCF
      7. CALCULATING THE UNLEVERED VALUE OF THE COMPANY
      8. VALUE CREATION METHODS USING ECONOMIC VALUE ADDED AND ECONOMIC PROFIT
      9. THE DISPERSION OF THE DISCOUNT RATE
      10. THE EQUITY PREMIUM
      11. CRITICAL ASPECTS OF A VALUATION
      12. SUMMARY AND CONCLUSIONS
      13. DISCUSSION QUESTIONS
      14. REFERENCES
      15. ABOUT THE AUTHOR
    2. Chapter 9: Real Options and Their Impact on M&As
      1. INTRODUCTION
      2. REAL OPTIONS ANALYSIS FOR M&AS
      3. LITERATURE REVIEW OF REAL OPTIONS IN THE M&A PROCESS
      4. THE PRACTICE OF REAL OPTIONS
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHORS
    3. Chapter 10: The Law and Finance of Control Premiums and Minority Discounts
      1. INTRODUCTION
      2. DEFINITION OF CONTROL PREMIUM/MINORITY DISCOUNT
      3. DELAWARE LAW, DELAWARE COURTS, VALUES, AND DISCOUNTS
      4. SOURCES OF THE ECONOMIC BENEFITS OF CONTROL
      5. EVIDENCE ON THE VALUE OF CONTROL
      6. CAN PRACTICE BE RECONCILED WITH FINANCE THEORY AND EVIDENCE?
      7. SUMMARY AND CONCLUSIONS
      8. DISCUSSION QUESTIONS
      9. REFERENCES
      10. ABOUT THE AUTHOR
    4. Chapter 11: Cross-Border Valuation Effects in Developed and Emerging Markets
      1. INTRODUCTION
      2. CROSS-BORDER M&A DEALS: AN OVERVIEW
      3. CROSS-BORDER M&A DEALS IN DEVELOPED AND EMERGING MARKETS
      4. THE FUTURE OF CROSS-BORDER M&A MARKET
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHOR
  9. Part III: The M&A Deal Process
    1. Chapter 12: Sources of Financing and Means of Payment in M&As
      1. INTRODUCTION
      2. HISTORICAL OVERVIEW
      3. VALUATION EFFECT OF TAKEOVER FINANCING AND PAYMENT DECISIONS
      4. THE DETERMINANTS OF TAKEOVER FINANCING AND PAYMENT DECISIONS
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHORS
    2. Chapter 13: Cultural Due Diligence
      1. INTRODUCTION
      2. ORGANIZATIONAL CULTURE AND ITS IMPACT ON FIRMS
      3. ASSESSING ORGANIZATIONAL CULTURE
      4. MULTIPLE CULTURES WITHIN THE SAME FIRM
      5. CULTURAL DUE DILIGENCE
      6. INTEGRATING DIVERSE CULTURES
      7. SUMMARY AND CONCLUSIONS
      8. DISCUSSION QUESTIONS
      9. REFERENCES
      10. ABOUT THE AUTHORS
    3. Chapter 14: Negotiation Process, Bargaining Area, and Contingent Payments
      1. INTRODUCTION
      2. COMMENCEMENT OF THE PROCESS
      3. A PROPOSAL IN PRINCIPLE BY THE BUYER
      4. OUTSIDE FACTORS AFFECTING THE NEGOTIATIONS
      5. HOW SHOULD THE BUYER PREPARE FOR THE NEGOTIATION?
      6. HOW SHOULD THE SELLER PREPARE FOR NEGOTIATIONS?
      7. THE NEGOTIATING TEAM FOR THE BUYER AND THE SELLER
      8. TYPICAL MATTERS TO BE NEGOTIATED
      9. ESTABLISHING A FRAMEWORK FOR THE NEGOTIATIONS
      10. NEGOTIATION STRATEGY FOR THE BUYER
      11. REACHING A PRELIMINARY UNDERSTANDING
      12. KEEPING THE DEAL TOGETHER
      13. HOW WOULD THIS PROCESS DIFFER IF THE SELLER IS A PRIVATELY HELD COMPANY?
      14. SUMMARY AND CONCLUSIONS
      15. DISCUSSION QUESTIONS
      16. REFERENCES
      17. ABOUT THE AUTHOR
    4. Chapter 15: Merger Negotiations: Takeover Process, Selling Procedure, and Deal Initiation
      1. INTRODUCTION
      2. THE TAKEOVER PROCESS
      3. SAMPLE SELECTION
      4. CHOICE OF SELLING METHOD AND DEAL INITIATION
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHORS
    5. Chapter 16: Postacquisition Planning and Integration
      1. INTRODUCTION
      2. THE INTEGRATION PROCESS: A CLOSER LOOK
      3. MEASURING M&A PERFORMANCE
      4. SUMMARY AND CONCLUSIONS
      5. DISCUSSION QUESTIONS
      6. REFERENCES
      7. ABOUT THE AUTHORS
    6. Chapter 17: Organizational and Human Resource Issues in M&As
      1. INTRODUCTION
      2. ORGANIZATIONAL PERSPECTIVE
      3. HUMAN RESOURCE PERSPECTIVE
      4. SUMMARY AND CONCLUSIONS
      5. DISCUSSION QUESTIONS
      6. REFERENCES
      7. ABOUT THE AUTHOR
  10. Part IV: Takeovers and Behavioral Effects
    1. Chapter 18: Takeover Strategies
      1. INTRODUCTION
      2. ANTECEDENTS
      3. CHARACTERISTICS
      4. CONSEQUENCES
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHOR
    2. Chapter 19: Defensive Strategies in Takeovers
      1. INTRODUCTION
      2. PREVENTIVE DEFENSE TACTICS
      3. REMEDIAL DEFENSE TACTICS
      4. THE FINANCIAL CRISIS AND HOSTILE TAKEOVERS
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHORS
    3. Chapter 20: The Impact of Restructuring on Bondholders
      1. INTRODUCTION
      2. THEORETICAL BACKGROUND
      3. EMPIRICAL EVIDENCE
      4. SUMMARY AND CONCLUSIONS
      5. DISCUSSION QUESTIONS
      6. REFERENCES
      7. ABOUT THE AUTHORS
    4. Chapter 21: Behavioral Effects in M&As
      1. INTRODUCTION
      2. NEOCLASSICAL EXPLANATIONS FOR M&As
      3. BEHAVIORAL EXPLANATIONS FOR M&As
      4. CORPORATE GOVERNANCE AND BEHAVIORAL EFFECTS IN M&As
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHOR
  11. Part V: Recapitalization and Restructuring
    1. Chapter 22: Financial Restructuring
      1. INTRODUCTION
      2. SHARE REPURCHASES
      3. DUAL-CLASS RECAPITALIZATIONS
      4. EXCHANGE OFFERS AND SWAPS
      5. DEBT RESTRUCTURINGS VIA PRIVATE WORKOUTS AND FORMAL BANKRUPTCY
      6. SUMMARY AND CONCLUSIONS
      7. DISCUSSION QUESTIONS
      8. REFERENCES
      9. ABOUT THE AUTHORS
    2. Chapter 23: Going Private and Leveraged Buyouts
      1. INTRODUCTION
      2. PRIVATE EQUITY INDUSTRY AND PROPERTIES OF TYPICAL LBO TRANSACTIONS
      3. WAVES OF PRIVATE EQUITY TRANSACTIONS
      4. EXIT EVENTS AND HOLDING PERIODS IN PRIVATE EQUITY INVESTMENTS
      5. VALUE CREATION IN PUBLIC-TO-PRIVATE TRANSACTIONS
      6. SUMMARY AND CONCLUSIONS
      7. DISCUSSION QUESTIONS
      8. REFERENCES
      9. ABOUT THE AUTHOR
    3. Chapter 24: International Takeovers and Restructuring
      1. INTRODUCTION
      2. FACTORS MOTIVATING INTERNATIONAL TAKEOVERS
      3. ISSUES TO CONSIDER IN INTERNATIONAL TAKEOVERS
      4. EMPIRICAL EVIDENCE
      5. SUMMARY AND CONCLUSIONS
      6. DISCUSSION QUESTIONS
      7. REFERENCES
      8. ABOUT THE AUTHOR
  12. Part VI: Special Topics
    1. Chapter 25: Joint Ventures and Strategic Alliances: Alternatives to M&As
      1. INTRODUCTION
      2. THE COSTS OF SHARING OWNERSHIP
      3. COSTS OF INTEGRATION
      4. JOINT VENTURES OR NONEQUITY ALLIANCES
      5. CROSS-BORDER DEALS
      6. DO M&As OR ALLIANCES CREATE MORE VALUE FOR SHAREHOLDERS?
      7. SUMMARY AND CONCLUSIONS
      8. DISCUSSION QUESTIONS
      9. REFERENCES
      10. ABOUT THE AUTHORS
    2. Chapter 26: Fairness Opinions in M&As
      1. INTRODUCTION
      2. INSTITUTIONAL DETAILS
      3. LEGAL ORIGINS
      4. THE LEGAL LITERATURE
      5. THE FINANCE LITERATURE
      6. SUMMARY AND CONCLUSIONS
      7. DISCUSSION QUESTIONS
      8. REFERENCES
      9. ABOUT THE AUTHORS
    3. Chapter 27: How Initial Public Offerings Affect M&A Markets: The Dual Tracking Phenomenon
      1. INTRODUCTION
      2. FRAMING THE DETERMINANTS OF DUAL TRACKING
      3. THE IMPLICATIONS OF DUAL TRACKING
      4. SUMMARY AND CONCLUSIONS
      5. DISCUSSION QUESTIONS
      6. REFERENCES
      7. ABOUT THE AUTHORS
    4. Chapter 28: The Diversification Discount
      1. INTRODUCTION
      2. MEASURING THE EFFECT OF DIVERSIFICATION ON FIRM VALUE
      3. DEBATES ON THE DIVERSIFICATION DISCOUNT
      4. THE DYNAMIC PATTERN IN THE DIVERSIFICATION DISCOUNT
      5. INTERNATIONAL EVIDENCE ON THE DIVERSIFICATION DISCOUNT
      6. SUMMARY AND CONCLUSIONS
      7. DISCUSSION QUESTIONS
      8. REFERENCES
      9. ABOUT THE AUTHOR
    5. Chapter 29: Partial Acquisitions: Motivation and Consequences on Firm Performance
      1. INTRODUCTION
      2. MOTIVATION OF PARTIAL ACQUISITIONS
      3. CONSEQUENCES OF PARTIAL ACQUISITIONS
      4. FACTORS AFFECTING PARTIAL ACQUISITIONS AND TARGET FIRM PERFORMANCE
      5. SUBSEQUENT FINANCIAL POLICIES AFTER THE PARTIAL ACQUISITIONS
      6. SUMMARY AND CONCLUSIONS
      7. DISCUSSION QUESTIONS
      8. REFERENCES
      9. ABOUT THE AUTHORS
  13. Answers to End-of-Chapter Discussion Questions
    1. CHAPTER 2 MERGER WAVES
    2. CHAPTER 3 TAKEOVER REGULATION
    3. CHAPTER 4 CORPORATE GOVERNANCE AND M&AS
    4. CHAPTER 5 ETHICAL AND SOCIAL ISSUES IN M&AS
    5. CHAPTER 6 THEORETICAL ISSUES ON MERGERS, ACQUISITIONS, AND DIVESTITURES
    6. CHAPTER 7 THE SHORT-TERM AND LONG-TERM PERFORMANCE OF M&AS
    7. CHAPTER 8 STANDARD VALUATION METHODS FOR M&AS
    8. CHAPTER 9 REAL OPTIONS AND THEIR IMPACT ON M&AS
    9. CHAPTER 10 THE LAW AND FINANCE OF CONTROL PREMIUMS AND MINORITY DISCOUNTS
    10. CHAPTER 11 CROSS-BORDER VALUATION EFFECTS IN DEVELOPED AND EMERGING MARKETS
    11. CHAPTER 12 SOURCES OF FINANCING AND MEANS OF PAYMENTS IN M&AS
    12. CHAPTER 13 CULTURAL DUE DILIGENCE
    13. CHAPTER 14 NEGOTIATION PROCESS, BARGAINING AREA, AND CONTINGENT PAYMENTS
    14. CHAPTER 15 MERGER NEGOTIATIONS: TAKEOVER PROCESS, SELLING PROCEDURE, AND DEAL INITIATION
    15. CHAPTER 16 POSTACQUISITION PLANNING AND INTEGRATION
    16. CHAPTER 17 ORGANIZATIONAL AND HUMAN RESOURCE ISSUES IN M&AS
    17. CHAPTER 18 TAKEOVER STRATEGIES
    18. CHAPTER 19 DEFENSE STRATEGIES IN TAKEOVERS
    19. CHAPTER 20 THE IMPACT OF RESTRUCTURING ON BONDHOLDERS
    20. CHAPTER 21 BEHAVIORAL EFFECTS IN M&AS
    21. CHAPTER 22 FINANCIAL RESTRUCTURING
    22. CHAPTER 23 GOING PRIVATE AND LEVERAGED BUYOUTS
    23. CHAPTER 24 INTERNATIONAL TAKEOVERS AND RESTRUCTURING
    24. CHAPTER 25 JOINT VENTURES AND STRATEGIC ALLIANCES: ALTERNATIVES TO M&AS
    25. CHAPTER 26 FAIRNESS OPINIONS IN M&AS
    26. CHAPTER 27 HOW INITIAL PUBLIC OFFERINGS AFFECT M&A MARKETS: THE DUAL TRACKING PHENOMENON
    27. CHAPTER 28 THE DIVERSIFICATION DISCOUNT
    28. CHAPTER 29 PARTIAL ACQUISITIONS: MOTIVATION AND CONSEQUENCES ON FIRM PERFORMANCE
  14. Index