Mergers and Acquisitions

Preface xi
Acknowledgments xv
CHAPTER 1 Structuring Fundamentals 1
Basic Corporate Finance Concepts 1
Reasons for Acquisitions 7
Three Basic Acquisition Structures 11
Structuring Considerations: Overview 14
CHAPTER 2 The Acquisition Process 20
Overview 20
Valuation of the Business 27
Investment Bank Engagement Letters 30
Confidentiality Agreements 35
Letters of Intent 37
Stay Bonuses and Other Employee Retention Arrangements 39
Business and Legal Due Diligence 42
Intellectual Property Due Diligence 55
From Signing to Closing 66
Appendixes 67
CHAPTER 3 Corporate (Nontax) Structuring Considerations 69
Business Objectives and Other Nontax Structuring Considerations 69
Acquisition Structure Diagrams 78
Forms of Acquisition Consideration 78
Debt 83
Cash, Stock, and Earnouts 96
Successor Liability and the De Facto Merger Doctrine 101
Securities Law Compliance 104
Antitrust Compliance: Hart-Scott-Rodino Act 114
Equity Compensation 120
Incentive Stock Options 126
Employment Agreements and Noncompetition Covenants 130
Indemnification 136
Employment and Benefits Law 138
Acquisition Accounting 140
Recapitalization Accounting 144
Appendixes 145
CHAPTER 4 Tax Considerations 146
Taxable Versus Tax-Free Transactions: Overview of Relevant Situations 146
Detailed Analysis of the Positions of the Target and Its Owners and of the Buyer 148
Taxable Transactions and Their Tax Effects 150
Tax-Free Transactions 154
Special Situations 159
Golden Parachute Tax 164
CHAPTER 5 The Definitive Acquisition Agreement 169
Economic Terms 169
Representations and Warranties 184
Covenants 196
Additional Agreements 199
Conditions to Closing 200
Survival of Representations and Indemnification 201
Termination 206
Miscellaneous 206
Representing Targets: A Summary 207
Appendixes 210
CHAPTER 6 Acquisitions of Public Companies 211
Public-to-Public Mergers: What is Different? 211
Case Law-Developed Fiduciary Duties and Standards of Review 214
Evolution of Fiduciary Duty Case Law and Judicial Review 220
Securities Laws and Public Company Acquisitions 237
Anti-Takeover Devices 247
Appendix 256
CHAPTER 7 Leveraged Buyouts (Structural and Tax Issues) and Acquisitions of a Troubled Business (Creditors' Rights and Bankruptcy) 257
Leveraged Buyouts: Structural and Tax Issues 257
Acquisition of a Troubled Business Generally 263
Fraudulent Transfers 265
Acquisitions Out of Bankruptcy 272
CHAPTER 8 International M&A 282
Cross-Border Acquisitions 282
CHAPTER 9 Joint Ventures 292
Reasons for Joint Ventures 292
Types of Joint Ventures 293
Typical Joint Venture Terms 295
Appendix 304
About the Website 305
Index 307