Contents 1
1 Introduction 1
Historical pattern of UK takeover activity 2
Objectives of mergers and acquisitions 4
Merges and acquisitions and business strategy 5
The dynamics of the takeover process 7
Economic consequences of takeovers 7
Cross-border acquisitions 8
Corporate divestments 9
Strategic alliances as alternatives to acquistions 10
Objective of the book 10
Outline of the book 10
References and further reading 12
2 Acquisition motives 13
Shareholder wealth maximisation perspective 14
Managerial perspeCtive 15
Empirical evidence on acquisition motives 21
Overview 23
References and further reading 24
3 Acquisitions and corporate strategy 25
Analytical framework for generic strategies 27
Corporate strategies for market entry 33
Acquisition as strategic choice 34
Value creation in different acquisition types 35
Value chain analysis for acquisitions 38
Acquistion criteria and target profile 39
Overview 40
References and further reading 41
4 Organisational dynamics and human aspects of acquisitions 42
A model of the acquisition process 43
Managing acquisition decision making 48
The post－acquisition integration process 50
Political and cultural perspectives of integration 52
Problems in integration 55
Overview 57
References and further reading 58
5 Antitrust regulation 59
The UK antitrust regime 60
Antitrust regulation in the European Union 66
Stock market reaction to MMC references 74
Antitrust regulation in the USA 75
Antitrust regulation in Continental Europe 77
Overview 78
References and further reading 78
Importance of regulating the bid process 79
6 Regulating takeover bids 79
Takeover regulation in the UK 80
Takeover regulation in the USA 95
Regulation of takeover bids on the Continent 95
Takeover regulation and takeover activity 97
Overview 99
Further reading 99
7 Advisers in takeovers 101
Role of advisers in acquisitions 102
Merchant banks 103
Responsibilities of advisers 114
Empirical evidence on the impact of advisers 116
Overview 117
References and further reading 118
8 Bid strategies and tactics 119
Bid strategies 119
Toehold，bid premium and bid outcome 125
Bid tactics 127
Empirical evidence on bid stratgies 130
Empirical evidence on bid strategies from the USA 133
Overview 136
References and further reading 136
9 Target valuation 138
Earnings and asset-based valuation models 139
Discounted cash flow mode 150
Valuation of private companies 156
Impact of tax on target valuation 156
Acquisitions and employee pension funds 157
References and further reading 159
Overview 159
10 Accounting for mergers and acquisitions 160
Accounting rules for business combinations 161
Merger relief 166
Accounting for goodwill 166
Accounting methods in practice 171
Accounting for business combinations in other countries 174
Overview 174
References and further reading 175
11 Paying for the acquisition 176
MethodS of payment for acquisitions 177
Tax aspects of payment currency 178
Impact of bidder’s financial strategy 181
Earnings dilution in a share exchange 182
Financing a cash offer 187
Financing with loan stock 189
Deferred consideration financing 190
Overview 193
Empirical evidence on the impact of payment method 193
References and fUrther reading 194
12 Defences against takeovers 196
Bid resistance motives 196
Bid defence strategies 197
Impact of defensive strategies 202
Cost of defence 204
Takeover defence outside the UK 205
Overview 211
References and further reading 212
13 Assessing the success of acquisitions 213
Defining success 213
Acquisitions and shareholders 214
Acquisitions and managers 221
Acquisitions and employees 223
US evidence on success of acquisitions 224
Overview 226
References and further reading 227
14 Making acquisitions work 229
Survey eVidence on acquisition performance 230
Factors contributing to acquisition failure 232
survey evidence on the acquisition process 233
Evidence on acquisition integration 235
Critical success factors 236
Acquisitions and the human factor 238
IIIustrations of successful acquisition process 239
Overview 241
References and further reading 242
15 Corporate divestments 243
Rationale for divestments 244
Forms of corporate divestment 246
Management buyouts and buyins 251
Divestments in the USA 259
Divestments in Europe 262
Overview 263
16 Cross－border acquisitions 265
Alternative overseas expansion strategies 266
Recent trends in cross－border acquisitions 266
References and further reading 269
Motivations behind cross-border acquisitions 269
Barriers to takeovers 269
Post－acquisition integration 273
Survey evidence on international acquisitions 274
Overview 277
References and further reading 277
17 Strategic alliances 279
Equity and non－equity joint ventures 280
Types of strategic alliance 280
International joint ventures 282
Models of a joint venture 285
Structuring a joint venture 288
Regulatory issues in joint ventures 289
Performance evaluation of joint ventures 292
Critical success factors in alliances 293
Overview 294
References and further reading 294
Index 296