Mergers and Acquisitions, 2ed: Strategy, Valuation, Leveraged Buyouts, and Financing

Preface

Acknowledgements

Unit I: Strategic Aspects of M&A

1 M&A: Trends and Waves 3

1.1 Introduction

1.2 Business Snapshot: Microsoft and LinkedIn M&A

1.3 Merger Waves

1.4 Indian M&A Scenario

2 Understanding M&A

2.1 Introduction

2.2 Types of Mergers

2.3 Merger Motives

3 M&A Strategy and Strategic Fit

3.1 Understanding Strategy

3.2 Successful Strategies

3.3 Strategic Analysis

3.4 Strategy to Create Competitive Advantage

3.5 Generic/Business Level Strategies

3.6 Cooperative Strategies

3.7 Corporate Level Strategies

3.8 Strategy Implementation

3.9 Understanding Strategic Fit

3.10 Strategic Fit and Synergy Gain

3.11 Synergy Gain and Added Value

3.12 M&A Tool for Corporate Growth Strategy

3.13 M&A: Strategic Investment Choice for Inorganic Growth

3.14 M&A Strategic Process

4 Corporate Restructuring and M&A

4.1 Introduction

4.2 Organizational Restructuring

4.3 Financial Restructuring

4.4 Portfolio Restructuring

4.5 Mergers and Acquisitions as an Inorganic Growth Tool

5 Identifying Opportunities in M&A: Buy Side and Sell Side

5.1 Introduction

5.2 Buy-Side M&A

5.3 Financing Options for Buyer

5.4 Fairness Opinion

5.5 Definitive Agreement

5.6 Buy-Side Valuation and Deal Analysis

5.6 Sell-Side M&A

5.7 Factors Affecting Sell-Side M&A

5.8 Sell-Side Process

5.9 M&A Strategic Buyer

5.10 Marketing Plan for Target

6 M&A: Empirical Studies

6.1 Introduction

6.2 Large Global Deals

6.3 Hostile M&As

6.4 Regional Trends and Insights

6.5 Cross-Border M&As

6.6 M&A Activities in Emerging Markets: Comparative Study of India and China

6.7 Sectoral Analysis of M&A Trends

6.8 Analysis of Empirical Studies on M&A Motives and Performance

Unit II: Legal Issues and Framework

7 M&A: Legal and Regulatory Framework

7.1 Introduction

7.2 M&A: Regulatory Framework

7.3 Merger / Amalgamation

7.4 Acquisition / Takeover

7.5 Cross-Border M&A

7.6 Foreign Direct Investment

7.7 Foreign Portfolio Investment

7.8 Foreign Venture Capital Investments

7.9 Pre-Agreement and Share Purchase Agreement

8 M&A: Takeover Defenses

8.1 Introduction

8.2 Probability of Takeover

9 M&A Accounting and IFRS-3

9.1 Introduction

9.2 Purchase Method

9.3 Pooling Method

9.4 New Accounting Norms (Post 2001)

9.5 Consolidation Process

10 Foreign Direct Investment and M&A

10.1 Introduction

10.2 Defining FDI

10.3 Rationale for FDI

10.4 Costs of FDI

10.5 Forex Rate Volatility, BOP, and FDI

10.6 Determinants of FDI

10.7 FDI in India

10.8 Advantages of FDI

10.9 FDI and Asian Countries

Unit III: Valuation and M&A

11 Concepts in Business Valuation

11.1 Introduction

11.2 Components of DCF

11.3 Valuing Firm with DCF

11.4 Unlevering Beta and Firm Valuation

12 Valuation by Multiples

12.1 Introduction

12.2 Steps in Comparable Analysis

12.3 Equity Value

12.4 Enterprise Value

12.5 EBITDA

12.6 Gross Profit Margin

12.7 Growth Metric

12.8 Credit Profile

12.9 Precedent Transaction Analysis

13 Business Valuation and Consideration Paid in M&A

13.1 Introduction

13.2 The Historical Cost Approach

13.3 The Residual Income Approach

13.4 The Multiples Approach

13.5 The Dividend Discount Model

13.6 The Discounted Cash Flow Approach

13.7 Economic Value Added

13.8 Consideration in M&A

Unit IV: Advance Topics in M&A Valuations

14 Brand Valuation and M&A

14.1 Introduction

14.2 M&A and Brand Valuation

14.3 Brand Valuation Methods

14.4 IFRS and Brand Valuation

14.5 Intangible Assets

14.6 Value Drivers for Valuation

15 Private Equity and Start-Up Valuation

15.1 Introduction

15.2 Convertible Debt for Start-Ups

15.3 Equity Series Round

15.4 Pre- and Post-Money Valuations

15.5 Future Dilution

15.6 Option Pool

15.7 Preferred Stock and Liquidation Preference

16 LBO Economics and Valuation

16.1 Introduction

16.2 LBO Economics

16.3 LBO Valuation

Unit V: Financing Aspects

17 Financing Options in M&A

17.1 Introduction

17.2 Normal Equity

17.3 Differential Voting Equity

17.4 Preference Shares

17.5 Debt Financing

17.6 Retained Earnings / Cash Surplus

17.7 Eurobonds

17.8 Foreign Bonds

17.9 Depository Receipts

17.10 External Commercial Borrowings (ECBs)

17.11 Equipment Financing

17.12 Leasing and Hire Purchase

18 Leveraged Buyout

18.1 Introduction

18.2 LBO Sponsors

18.3 LBO Mode of Target Acquisition

18.4 Criteria for Selecting LBO Candidates

18.5 LBO Capital Structure

18.6 Concept of Financial Leverage and Risk

18.7 History of LBOs

18.8 Role of Private Equity Investors

18.9 Theories of LBOs

18.10 Exit Strategies for LBO

18.11 LBOs in India

19 Private Equity and M&A

19.1 Introduction

19.2 Functions of a PE Firm

19.3 Structure of a PE Firm

19.4 Private Equity and Hedge Funds

19.5 PE Investment Strategy

19.6 Types of Private Funds

19.7 Regulation of PE Market

19.8 Factors Responsible for Private Equity Growth

19.9 PE in India

20 Investment Banks and M&A

20.1 Introduction

20.2 Investment Bank Structure

20.3 Investment Bank Functions

20.4 Investment Bank Fee

20.5 Regulation of Investment Banks

20.6 Investment Banks in India

21 Hedge Funds and M&A

21.1 Introduction

21.2 Hedge Funds and M&A

21.3 Characteristic Features of Hedge Funds

21.4 Growth of Hedge Funds

21.5 Hedge Fund Indices and Databases

21.6 Types of Hedge Fund Investors

21.7 Hedge Fund Investment Strategies

Unit VI: Additional Topics in M&A

22 Post-Merger Integration

22.1 Introduction

22.2 Factors Affecting Integration

22.3 Functional Integration

23 Corporate Governance and M&A

23.1 Introduction

23.2 Corporate Governance Mechanisms

23.3 Corporate Governance Models

23.4 Corporate Governance and M&A

23.5 Mergers and Acquisitions: Approaches of Corporate Governance

23.6 Corporate Governance Issues: Views of Acquirers and Targets

23.7 Corporate Governance and M&A: Indian Context

Index

Unlike in the West, Mergers and Acquisitions (M&As) are still relatively rare in India. Consequently, not only is knowledge about M&As limited, books on the subject are all too few. This book fills this void. It combines the best of theory and practice and through the clever use of case studies, many of which have been drawn from the Indian corporate world, illustrates how M&As have worked in reality, and explains the success stories, the failures and the essential ingredients of a successful M&A.

– Mythili Bhusnurmath, Consulting Editor, Economic Times; Senior Consultant, National Council of Applied Economic Research

Mergers and Acquisitions: Strategy, Valuation, Leveraged Buyouts, and Financing is an excellent piece of work to help one get familiar with fundamentals of Investment Banking. Its reader-friendly language provides crystal clear clarity of various concepts. Definitely recommended for the people with an interest in this field.

– Ankur Singhal, India Head, Corporate & Investment Banking, FirstRand Bank

This book provides step-by-step LBO valuation and M&A transactions with exercises, models and case studies. It will be a valuable insight into the art and science of buyouts, M&A valuations and deal analysis.

– Ashish Kila, Director & Chief Investment Officer, Perfect Group

This book provides the nuts and bolts of M&A transactions. A must read for anyone involved in M&A deal transactions.

– N. R. Bhusnurmath, Professor, MDI Gurgaon

This book on M&A is the best resource that would bridge the gap between the academic world and real world of M&A. It is a must for every M&A practitioner. It is written with practical perspective and this is what sets it apart from the other texts.

– Senthil Kumar, CEO, Flight Search Inc. DBA