Term
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Definition
-Treat deal management as a core part of business
-Well established processes
-flexible - adjust as they move forward
-Carefully coordinate with various actors |
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Term
| Friendly Acquisition Process - Five Distinct Stages |
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Definition
1. Screening potential deals
2. Reaching an initial agreement- from talkin to planning
3. Conducting due diligence - gearing up for negotiations
4. Setting the final agreement - getting to final terms
5. Closing - making it happen |
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Term
1. Screening Deals
Two Simple Rules in Screening Deals |
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Definition
-Look at everything - Successful acquires always on the lookout for deals, look at 500, do 2 to 3.
Keep a strategic focus - be strict about sticking to guidelines and overall corporate and acquisition strategy |
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Term
| 2. Reaching an initial agreement |
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Definition
-Don't get bogged down over price
-Identify Must Haves
-Get Friendly - relationship capital |
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Term
| 3. Conducting due diligence - gearing up for negotiations |
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Definition
-Turn over all rocks
-size up the other side
-feed due diligence into business planning - keep original deal team involved throughout process |
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Term
| 4. Setting the final agreement- Getting to final terms |
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Definition
Negotiations on price and strategy - maintain momentum
Use multiple negotiation channels -
Managers, Lawyers, Investment Bankers
-this allows for parallel processing, easier to send info, negotiating at different levels |
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Term
| 5. Closing - making it happen |
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Definition
Sell deal to stakeholders, p.r. and investor relations campaigns
-Move fast, time is your enemy
-deal management- source of competitive advantage |
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Term
| Hostile takeover Tactics - Toehold, Bearhug, Tender Offer, Proxy Contest, Litigation |
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Definition
Toeholds- Hostile bidders generally buy target company shares prior to launching open bid. Buyer must discose intentions on schedule 13D when holdings reach 5%.
Bearhugs- State or imply hostile firm will approach shareholders with a tender offer should acquisition be turned down
Tender Offers- Offer made directly to target company's shareholders
Proxy Contests- Using voting rights to contest seats on board of directors, management proposals, etc
Litigation- Challenges board breaches fiduciary duties to stockholders |
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Term
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Definition
| Hostile bidders generally buy target company shares prior to launching open Board members required to act in the best interest of the corporation |
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Term
| Two main fiduciary duties |
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Definition
Duty of Care - requires a board "to make informed and reasonable decision and to exercise reasonable supervision of the business"
Duty of Loyalty - Mandates that board members act in good faith and in what they believe to be the best interest of the corporation |
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Term
| M&A 7 Legal Factors to Consider |
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Definition
1. Company's Intrinsic Value- Not overpaying or selling too cheap
2. Nonprice Consideration
3. Reliability of Officers' Reports to the Board
4. Appropriateness of delegating negotiating authorityu to management
5. Reliability of Expert's Reports
6. Investment Banker's Fee Structure
7. Reasonableness of Any Defensive Tactics |
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Term
| Merger Implementation Challenge H.P. Compaq |
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Definition
| 1. Operational and Strategic Integration (2) Two very large high tech companies (3) Established Cultures (4) Highly dynamic competitive environment |
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Term
| Acquisition Integration Framework - 4 Integration Processes Critical |
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Definition
| Process 1: Formulating the integration logic and performance goals (2) Creating the Integration plan (3) Executing operational integration-short term Process (4) Executing Strategic Integration - Long term |
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Term
| Process 1: Formulating the Integration Logic and Performance Goals |
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Definition
Paticipants: B.O.D., Top Management, Consultants
Integration Logic- Formulate new corporate strategy logic on how combination improves positioning
Assumptions - Make assumptions about external environment to formulate short term and long term strategy and goals |
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Term
| Process 2: Creating the Integration Plan - Pre-Deal Planning Activities |
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Definition
| 1. Identifying short-term goals for synergies 2. Workforce Reductions 3. Procurement rationalization 4. Phasing out redundant products 5. gettin the new organization up and running 6. preparation for process of executing operational integration |
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Term
| Process 3: Executing operational integration |
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Definition
Focus - short term performance
Difficult times - layoffs, new assignments, new org. structure, new sales teams call on worried customers |
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Term
Process 3: executing operational integration
Most urgent short term goals |
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Definition
| 1. Hold onto customers and achieve market share goals 2. achieve quarterly financial results 3. eliminate targeted product redundancies 4. Get procurement synergies 5. Select the right people 6. Get the organization to work |
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Term
| Process 4: Executing Strategic Integration |
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Definition
Focus- Longterm
Involves: Completing longer term operational integration tasks, completing multiyear strategic initiatives necessary to get ahead of envisioned competitive dynamics, feedback loop- helps test and revise key assumptions, logic, strategic initiatives |
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Term
| Process of executing Strategic Integration - Must effectively cope with: |
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Definition
| Where key competitors will be, Based on continuing to scan evolving environment, requires forcefully executing multi-year strategic initiatives |
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