M&A Outline

Class I
David Katz
Mark Gordon

Mergers and Acquisitions

U.S transaction happen in CYCLES
1999-2001 highest point, then dropped considerably.
2007 another peak time for financial deals.

Financial crisis: can’t get Capitalimpact on M&A activity.
“synergy” cross savings. No need for two CEOs, recording systems…etc

Leveraged Buyout: lack of capital people become conservative.

FACTORS
+ consolidation makes sense in this economomy
+ private equity firms have $
+ activist investorsshort term outlook (hedge funds)

volatile stock market credit crunchbanks unwilling to lend $ negative perspective on deals

AOL/Time Warner bought AOL when it was at its peak, then rapidly sunk.

Boston Scientific/J&J

Deals generate unemployment? It may be good business decision, but what about the broader picture, how about for the country itself? What happens when government intervenes?

Commission Foreign Investment: protective, affects M&A activity.

EU Directive on Takeovers: outside EU target company can take defensive actions against takeovers. NOT in the EU.

Public Company Acquisition
1) Merger: 2 companies get merged: most common structure reverse triangular merger
2) T.O: buying stock for cash (combined with a later merger, it gives you control)
3) Exchange use stock or stock and cash.
4) Proxy Fight: take control by controlling BOD. Get the company without putting the equity and without investing: has not been successful in the past. Bay have a brighter future in combination with TO

Private Company Acquisition
Smaller universe of SH
Agreements with them: state law mechanisms.

Asset Acquisition: not the business
Divestures: making accompany public IPO, or Spin Offs
LBO Going private transaction: SEC Rules. If on both sides of the deal, be careful