Practitioner's Complete Guide to M&As, with Website

DAVID T. EMOTT is a seasoned manager with over twenty-five years of progressively greater responsibility in directing corporate strategy development, M&A and joint venture initiatives, performance measurement, strategic planning, control, financing, information technology, and tax planning activities in international and domestic theaters. He currently runs his own consulting business, D.T. Emott Advisory LLC, which provides services to buyers and sellers of companies or operating units.

• Preface xiAcknowledgments xiiiTOPIC 1 Strategy Development, Then M&A 1TOPIC 2 M&A Process: Front to Back 13TOPIC 3 Why M&A? 17TOPIC 4 Deal Criteria 19TOPIC 5 Deal Sourcing 26TOPIC 6 Fees for Services 29TOPIC 7 Financial and Strategic Buyers 36TOPIC 8 How Long Will It Take to Complete the Deal? 38TOPIC 9 Confidentiality Agreements 39TOPIC 10 "Concern Capture" Due Diligence 44TOPIC 11 Keep Deal Conversations Quiet 53TOPIC 12 Auctions 54TOPIC 13 Seller’s Prospectus 62TOPIC 14 Pay for Inherent Capabilities Only 65TOPIC 15 Platform Value 68TOPIC 16 Buyer and Seller Value Perspectives 70TOPIC 17 Integration Initiatives Will Determine Deal Value 73TOPIC 18 Unlock Hidden Value: The Lean Enterprise 75TOPIC 19 The Real Deal: Lean 78TOPIC 20 Valuation: An Introduction 82TOPIC 21 Discounted Cash Flow: An Introduction 86TOPIC 22 Free Cash Flow 90TOPIC 23 Fair Return on a Deal 95TOPIC 24 Risk-Free Rates 104TOPIC 25 Equity Risk Premiums 105TOPIC 26 What Is Business Risk? 106TOPIC 27 Entropy: Tendency toward Negative Variation 110TOPIC 28 Equity Investor Risk 112TOPIC 29 Beta 113TOPIC 30 Systematic Risk 116TOPIC 31 Unsystematic Risk 118TOPIC 32 Beta with or without Debt 119TOPIC 33 Beta: Levered or Unlevered 120TOPIC 34 Beta Application in Determination of CU 123TOPIC 35 Levered Beta Moves as Debt to Equity Moves 125TOPIC 36 Size Premium 127TOPIC 37 Weighted Average Cost of Capital 130TOPIC 38 Terminal Values, Terminal Value Multiples, and Terminal Value DCFs 137TOPIC 39 Discounted Cash Flow Valuation Illustrated 142TOPIC 40 Leverage: The Real Deal 147TOPIC 41 Debt Limits 149TOPIC 42 Debt Adds Value: Derivation of Dt 151TOPIC 43 The Leveraged Buyout; Definition and Valuation 155TOPIC 44 Valuing the Leveraged Buyout 160TOPIC 45 Real Option Valuation: An Introduction 169TOPIC 46 Real Option Valuation: Application and Illustration 173TOPIC 47 M&A Values Are Not All the Same 179TOPIC 48 Discounts and Premiums 183TOPIC 49 Discounted Cash Flow Valuations: Minority or Control 192TOPIC 50 Inflation in DCF Valuations 194TOPIC 51 Integration, Alignment, and Synergy Benefits: Plan It Out 195TOPIC 52 Integration, Alignment, and Valuing Synergy Benefits 197TOPIC 53 Venture Capital Valuation 208TOPIC 54 Discount Rates and Valuing Free Cash Flow 211TOPIC 55 Growth, C*, and Return: The Engine to Increased Valuations and Deferred Tax Advantage 222TOPIC 56 How Fast Can the Target Grow? 225TOPIC 57 Cash Flow Multiples, Growth Rates, and Discount Rates 227TOPIC 58 Comparable Multiples 239TOPIC 59 Converting FCFM to P/Es and Other Valuation Multiples and Deriving Slot Multiples for Public Companies 247TOPIC 60 EBITDA Valuation Engine 264TOPIC 61 Free Cash Flow Equivalent Impacts for Arbitrary Adjustments to Discount Rates 276TOPIC 62 Transferring Defined Benefit Pension Plan Liability Issues 278TOPIC 63 Environmental Remediation Expenses 282TOPIC 64 Environmental Insurance 283TOPIC 65 Management Warrant Incentive Plans 285TOPIC 66 Negotiation: Introduction and Overview 290TOPIC 67 Negotiation: Values, Offers, Prices, and Risk Assumption 292TOPIC 68 Negotiation: Offer Content 296TOPIC 69 Negotiation: Create Space in Your Ideas 298TOPIC 70 Negotiation: Beware of the Emotions of Private Sellers 299TOPIC 71 Negotiation: Imprint; Do Not Lecture 301TOPIC 72 Negotiation: Handling Tight Spots 303TOPIC 73 Negotiation: Closing the Bid-Ask Negotiating Gap 305TOPIC 74 Negotiation: Be Aware of Leverage and Deal Momentum Shift 308TOPIC 75 Negotiation in the Final Stages 311TOPIC 76 Negotiation: Use Earn-Outs or Noncompete Agreements to Close a Bid-Ask Gap 313TOPIC 77 Negotiation: After the Deal Is Agreed 318TOPIC 78 Negotiation: Bluffing and How to Handle It 321TOPIC 79 Negotiation: When Do You Step Away? 324TOPIC 80 Negotiation: When Do You Proceed? 326TOPIC 81 Negotiation: Do a Time Capsule 328TOPIC 82 Negotiation: Build Trust to Get Closed 329TOPIC 83 Exits under Duress: Have a Plan if the Deal Does Not Work 333TOPIC 84 Structuring the Deal: An Overview 334TOPIC 85 Structuring the Deal: Asset Step-Ups, Noncompete, and Synergy Valuation Engines 341TOPIC 86 Total Shareholder Return 346TOPIC 87 Stakeholder Value Creation 349TOPIC 88 EVAquity: Align Shareholder and Management Interests 353TOPIC 89 Letter of Intent 358TOPIC 90 Purchase and Sale Agreement 359TOPIC 91 Purchase and Sale Agreement: Explanation by Section 361TOPIC 92 Purchase Price Adjustments for Working Capital 370TOPIC 93 Indemnification and Survival Provisions 374TOPIC 94 Escrows 379TOPIC 95 Joint Venture Transaction: Valuation and Structuring Overview 381TOPIC 96 Why Deals Go Bad 389TOPIC 97 After the Deal: Do a Deal Bible 391TOPIC 98 Do the Audits of the Integration and Deal Value Creation Plan 393About the Web Site 395Index 397