Mergers and Acquisitions from A to Z: Strategic and Practical Guidance for Small- And Middle-Market Buyers and Sellers First Edition

The A to Z of M&A is a great book if you want to know about the M&A process and the various elements involved in it. It is a good starting place to get your bearings right. This book explains in detail what the motivations could be behind a merger and an acquisition. With that key understanding, the book walks us through the next steps, such as developing an Acquisition Plan and the contents therein, Letter of Intent (LOI) and the binding and non-binding terms, preparation of the Work Schedule, etc.Due Diligence is explained in terms of financial/strategic and legal due diligence. Due diligence is a process where confirmation of the initial valuations and assumptions happens but it is also the time to jump ship if the risks or potential liabilities exceed anticipation or comfort level of the buyer. Another critical point is that due diligence happens in phases and is iterative in nature.I liked the emphasis on Fairness Opinions and how the debate around it is growing to keep it `fair'. Regulatory considerations could be general or industry specific. The passage of SOX adds a whole new level to the M&A due diligence and advisory services. Environmental and Federal Securities Laws have become another area for a deep dive.The book distinguishes between horizontal (think competitors) and vertical (think supply chain) acquisitions. It also captures technical details such as the waiting period after the notification has been filed with the FTC and DOJ and that request for an `early termination' will make the transaction public.An acquirer can pay the seller by using any of methods available namely cash, stock, promissory notes, convertible securities, contingent payments or a combination thereof. These are plain vanilla compared to the nontraditional structures and strategies, which are Spin Offs, Leveraged Buy-Outs (LBOs), Consolidation/Roll Ups, and the much emphasized ESOPs. For a spin off to be viewed favorably by IRS, it has to be a deal that will help with access to capital markets, debt-financing prospects, competitive position, management direction, or retention of key employees.The book also introduces the three basic methods of valuation: Comparable Company and Comparable Transaction Analysis, Asset Valuation, and DCF. Within Asset Valuation, the subtle distinction between `Cost of Reproduction' and `Cost of Replacement' is referenced.After the negotiation of purchase price, the team starts to focus on the financing options for the deal. There are three primary issues related to acquisition financing: arriving at the ideal amount of debt to be raised, determining a capital structure with the future success of the company in mind, and the cost of the funds. The sources of financing are the seller and the various types of debt, with collateralized financing not being as popular as it was in earlier years. The importance of communicating the risk mitigation strategies to the loan officer is also emphasized. The variables of an Acquisition Plan and the various documents that are required for venture capital financing negotiations are explained. The different types of securities and why one is preferred over the other, is also covered.The book takes my understanding of double dipping to a whole new level. This concept is covered in the context of indemnification clauses in the Asset Purchase Agreement. A breach of the same can trigger both a purchase price adjustment and a claim for indemnification.The way I view an M&A transaction is that it is a well orchestrated dance. There is a wonderful energy about M&A transactions, which touches every aspect of a business, which I find most enticing and challenging.

This book offers a fairly comprehensive overview of many of the practical details (esp. the legal ones) of M&A in the small to mid-market. The author is a lawyer who obviously has extensive experience in this field and more importantly has the ability to convey his knowledge in clean and concise prose. Of course, this book is not going to be an exciting read, but it is highly recommended for anyone going into this field who wants to develop a framework for understanding how M&A is done.The book focuses like a laser beam on giving the reader a broad introduction. There are few (if any) case studies, but that's actually a good thing because it allows the reader to quickly understand how everything fits together in a M&A transaction.One nice additional feature is a chapter on alternatives to M&A.This book definitely belongs in the business library of any professional involved in M&A transactions.

Another good product by Andrew Sherman.

A practical view of buying and selling companies for middle-market players. Kenneth H Marks, lead author of The Handbook of Financing Growth: Strategies, Capital Structure, and M&A Transactions (Wiley Finance)