The Art of Capital Restructuring : Creating Shareholder Value through Mergers and Acquisitions

THE ART OF CAPITAL RESTRUCTURING

The Robert W. Kolb Series in Finance is an unparalleled source of information dedicated to the most important issues in modern finance. Each book focuses on a specific topic in the field of finance and contains contributed chapters from both respected academics and experienced financial professionals. As part of the Robert W. Kolb Series in Finance, The Art of Capital Restructuring contains comprehensive insights on both the art and science of this dynamic discipline.

Mergers, acquisitions, and corporate restructuring represent a fast-paced and highly complex environment in which transactions provide unique opportunities with considerable risk. It requires an evolving understanding of various issues, and this book considers many of them. Divided into six comprehensive parts--with each chapter containing a set of discussion questions to reinforce key concepts--The Art of Capital Restructuring offers essential insights that both financial veterans and aspiring professionals need to succeed.

Topics covered throughout this timely guide include:

Merger waves, takeover regulation, and corporate governance

Standard valuation methods and real options, as well as the adjustment needed for the implicit minority discount

The M&A deal process, from sources of financing and means of payment to negotiation and integration

The impact of restructuring on bondholders and behavioral effects in M&As

Restructuring activities, including financial restructuring, going private, and leveraged buyouts

Skillfully blending theory with practice, this book will put you in a better position to make the most informed decisions with regard to capital restructuring in today's dynamic business world.
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Mergers and acquisitions represent a vital business tool as well as an alternative growth and expansion strategy for many companies. Given the frequency of these transactions, understanding how and why they take place is essential to realizing the expected benefits of such activities and ensuring the critical goal of maximizing shareholder value.

The Art of Capital Restructuring, part of the Robert W. Kolb Series in Finance, provides a fresh look at the current state of mergers, acquisitions, and corporate restructuring in both developed and emerging markets. Filled with in-depth insights and practical advice, this reliable resource contains detailed discussions of several different forms of physical restructuring such as divestitures as well as capital restructuring. Along the way, it also explains the financial aspects of these transactions and clearly addresses the legal, regulatory, tax, ethical, social, and behavioral issues associated with them.

Divided into six comprehensive parts, with contributed chapters from leading academics and practitioners from around the world, The Art of Capital Restructuring includes the latest M&A-related research, with coverage extending from basic concepts, motives, strategies, and valuation techniques to their application to increasingly complex, real-world situations. Chapter by chapter, it explains these methods from both a management and investor perspective while emphasizing the wealth effects they have on shareholders.

Engaging and informative, The Art of Capital Restructuring distinguishes itself in many ways from other books on this topic. Blending recent theoretical developments with the results of relevant research studies and actual M&A examples, it skillfully:

Examines best practices that lead to M&A success, including valuing the target, negotiating and financing the deal, and engaging in post-acquisition planning and integration

Reveals research dealing with both foreign and domestic firms, detailing the cross-border effects involving developed and emerging markets

Details both the technical and human aspects of M&As, from valuation issues to corporate governance and cultural due diligence

Outlines different M&A takeover and defensive takeover strategies

And much more

As markets become more integrated, the debate about the long- and short-term performance of M&As continues to intensify. The Art of Capital Restructuring will help you gain a firm understanding of both the art and science of this discipline and put you in a better position to continue to create shareholder value in the process.
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Acknowledgments ix 1 Mergers, Acquisitions, and Corporate Restructuring: An Overview 1 H. Kent Baker and Halil Kiymaz PART I Background 2 Merger Waves 17 Jarrad Harford 3 Takeover Regulation 39 Marina Martynova and Luc Renneboog 4 Corporate Governance and M&As 57 Fei Xie 5 Ethical and Social Issues in M&As 71 Robert W. McGee 6 Theoretical Issues on Mergers, Acquisitions, and Divestitures 87 Abdul H. Rahman 7 The Short-Term and Long-Term Performance of M&As 105 Shantanu Dutta and Samir Saadi PART II Valuation 8 Standard Valuation Methods forM&As 127 Pablo Fernandez 9 Real Options and Their Impact on M&As 151 Hemantha Herath and John S. Jahera Jr. 10 The Law and Finance of Control Premiums and Minority Discounts 169 Helen Bowers 11 Cross-Border Valuation Effects in Developed and EmergingMarkets 185 Wenjie Chen PART III The M&A Deal Process 12 Sources of Financing and Means of Payment in M&As 205 Marina Martynova and Luc Renneboog 13 Cultural Due Diligence 223 Ronald F. Piccolo and Mary Bardes 14 Negotiation Process, Bargaining Area, and Contingent Payments 243 William A. Grimm 15 Merger Negotiations: Takeover Process, Selling Procedure, and Deal Initiation 261 Nihat Aktas and Eric de Bodt 16 Postacquisition Planning and Integration 281 Olimpia Meglio and Arturo Capasso 17 Organizational and Human Resource Issues in M&As 297 Siddhartha S. Brahma PART IV Takeovers and Behavioral Effects 18 Takeover Strategies 323 Shailendra (Shail) Pandit 19 Defensive Strategies in Takeovers 339 Christian Rauch and Mark Wahrenburg 20 The Impact of Restructuring on Bondholders 359 Luc Renneboog and Peter G. Szilagyi 21 Behavioral Effects in M&As 385 Jens Hagendorff PART V Recapitalization and Restructuring 22 Financial Restructuring 401 Otgontsetseg Erhemjamts and Kartik Raman 23 Going Private and Leveraged Buyouts 419 Onur Bayar 24 International Takeovers and Restructuring 437 Rita Biswas PART VI Special Topics 25 Joint Ventures and Strategic Alliances: Alternatives to M&As 461 Tomas Mantecon and James A. Conover 26 Fairness Opinions in M&As 483 Steven M. Davidoff, Anil K. Makhija, and Rajesh P. Narayanan 27 How Initial Public Offerings Affect M&A Markets: The Dual Tracking Phenomenon 495 Roberto Ragozzino and Jeffrey J. Reuer 28 The Diversification Discount 511 Seoungpil Ahn 29 Partial Acquisitions:Motivation and Consequences on Firm Performance 527 Pengcheng Zhu and Shantanu Dutta Answers to End-of-Chapter Discussion Questions 545 Index 581
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H. Kent Baker, PhD, CFA, CMA, is University Professor of Finance and Kogod Research Professor at the Kogod School of Business at American University, Washington, D.C. He has published extensively in leading academic and professional finance journals including the Journal of Finance, Journal of Financial and Quantitative Analysis, Financial Management, Financial Analysts Journal, and Journal of Portfolio Management. He has also published more than a dozen books including several corporate finance textbooks. Recognized as one of the most prolific authors in finance during the past 50 years, Professor Baker has consulting and training experience with more than 100 organizations. Halil Kiymaz is Bank of America Chair and Professor of Finance at the Crummer Graduate School of Business at Rollins College. He holds the Chartered Financial Analyst (CFA) designation and has served as a grader for the CFA Institute. Professor Kiymaz maintains an extensive research agenda focusing on everything from international M&As to the financial management of multinationals, and has published more than 50 articles in scholarly and practitioner journals. He is the recipient of several research awards, including the McGraw-Hill Irwin Best Paper Award and Outstanding Research Award at the Global Conference on Business and Finance.
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