Art of M&A: Financing and Refinancing - Hardcover

Lajoux, Alexandra

Hardcover

ISBN 10: 0070383030 ISBN 13: 9780070383036

Publisher: McGraw-Hill Education, 1999

Synopsis

"M&A financing and refinancing can be a path to progress--starting today, as you read the ideas in this book and dream up your own."
--Alex Sheshunoff, From the Foreword

The expansion of a business through merger or acquisition involves experience and wisdom. It involves the ability to envision how two or more combined companies can equal far more than the sum of their parts. It also involves, more often than not, the use of "other people's money." The Art of M&A Financing and Refinancing tells you how to obtain and repay that money, taking the complex, technical aspects of M&A finance and making them clear, understandable, and applicable to your situation.

This comprehensive reference handbook points you to all the facts, figures, names, and places you need to finance your next deal. Unique in that it concentrates solely on the most fundamental component of the M&A transaction--money--The Art of M&A Financing and Refinancing provides clear-headed advice and guidance on:

• The key financial sources and instruments you can use--for any kind of deal
• How to select the most appropriate type of financing--debt, equity, or a combination of the two
• Financing via debt--loans, bonds, and leases--and the virtually infinite ways to borrow or lend
• Tactics to consider in contracts, including contingent payments, earn-outs, and equity kickers
• How to determine when refinancing is necessary--and plan for it as a probability
• How volatile global events affect economic systems--and the impact this has on M&A financing and refinancing
• Debt/equity hybrids and the vehicles through which they travel--including mezzanine financing and seller takeback financing

The ability of one company to acquire another has helped companies throughout history grow stronger, more vibrant, and more competitive. Just as your business must establish satisfying relationships with external vendors and suppliers for its component parts and services, it must also become accustomed to using external financing for growth. Let The Art of M&A Financing and Refinancing show you how to combine the "Main Street" of commercial banking with the "Wall Street" of investment banking, and help you stay on the profitable side of the M&A success ledger.

About this title

From the Author:

Comprehensive
Dear Readers:

Welcome to the wonderful world of M&A financing. J. Fred Weston and I are pleased to publish this guide to sources and instruments for growth.

To give you a flavor of this new work, here is a quote from the book jacket:

"The expansion of a business through merger or acquisition involves experience. Wisdom. The ability to envision how two or more combined companies can equal far more than the sum of their parts. It also involves, more often than not, 'other people's money.' The Art of M&A Financing & Refinancing tells you how to obtain and repay that money. It takes the complex, technical aspects of M&A finance and makes them clear, understandable, and applicable to your situation. Do you need to estimate the total cost of financing a business? Look in Chapter 2. When might preferred stock by more advantageous than subordinated debt? Look in Chapter 3. The special tax issues that you can ordinarily expect in a management buyout? Look in Chapter 10."

As you can see, we have aimed to be comprehensive. For your information, we have listed the Table of Contents below. We hope you enjoy scrolling down....and reading up....on M&A Financing and Refinancing.

Alexandra R. Lajoux for Weston and Lajoux

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TABLE OF CONTENTS

The Art of M&A Financing and Refinancing: A Guide to Sources and Instruments for External Growth

Alexandra R. Lajoux and J. Fred Weston With a Foreword by Alex Sheshunoff

FOREWORD ON THE POWER OF FINANCIAL IDEAS by Alex Sheshunoff

PREFACE

ACKNOWLEDGMENTS

PART ONE Prerequisites

CHAPTER 1: BASIC DEFINITIONS AND DATA

Introduction. Definitions of Key Terms. Basic Data. Key Instruments. Key Sources. Concluding Comments. Endnotes.

CHAPTER 2: ASSESSING FINANCING NEEDS

Introduction. Basic Principles. Danger Zones. Targeting the Amount of Financing Needed. Estimating the Amount of Financing Possible. Selecting the Most Appropriate Type of Financing (Debt vs. Equity). Concluding Comments. Appendix 2-A: Tools. Endnotes.

CHAPTER 3: REGULATORY, TAX, AND ACCOUNTING ISSUES IN STRUCTURING DEAL FINANCING

Introduction. General Regulatory and Tax Considerations. Choice of Entity. Distinguishing Between Debt and Equity. Tax Considerations in Structuring Debt. Capital Gains vs. Ordinary Income. Structuring an Installment Sale. Cost Basis vs. Carryover Basis. Accounting Considerations. Concluding Comments. Endnotes.

PART TWO A Closer Look at Instruments

CHAPTER 4: DYNAMICS OF DEBT-BASED FINANCING

Introduction. Debt Fundamentals. Types of Debt. Using Notes and Bonds to Pay for Acquisitions. Using Multiple Layers of Debt. Sale-Leasebacks. Tax-Exempt Bonds. Junk Bond Basics. Concluding Comments. Endnotes.

CHAPTER 5: DYNAMICS OF EQUITY-BASED FINANCING

Introduction. Equity Fundamentals. Private Equity Offerings. Public Equity Offerings. Using Stock to Pay for a Transaction. Beyond IPOs-Equity-Based Fund-Raising Strategies. Concluding Comments. Endnotes.

CHAPTER 6: DYNAMICS OF "HYBRID" FINANCING

Introduction. The Hybrids. Mezzanine Financing. Registration Rights. Seller Takeback Financing. Concluding Comments. Endnotes.

PART THREE A Closer Look at Sources

CHAPTER 7: WORKING WITH DEBT SOURCES

Introduction. Overview of Lenders. Commercial Banks. Banking Lending. Approaching a Source of Debt Financing: The Bank Book and Commitment Letter. Insurance Company Financing. Special Considerations in Junk Bond Lending. Concluding Comments. Endnotes.

CHAPTER 8: WORKING WITH EQUITY SOURCES

Introduction. The Equity Financing Spectrum: From Venture Capital to Private and Public Offerings. The Role of Underwriters. Investment Banks. M&A Activities Among Financial Institutions. Concluding Comments. Endnotes.

CHAPTER 9: WORKING WITH "BACKERS"

Introduction. Backers and Private Equity Financing. Exit Strategies. Beyond Private Equity Financing: Other Types of Backing. Angels. Suppliers as Backers. Concluding Comments. Appendix 9-A: Sample Announcement of a Start-Up Private Equity Fund. Appendix 9-B: Profiles of Backers. Endnotes.

PART FOUR Strategies for Financing and Refinancing

CHAPTER 10: MANAGING MULTIPLE INSTRUMENTS -PLANNING POINTS

Introduction. Postmerger Impact of Financing Instruments. Dilution Concerns in Transactions Including Stock. Using Multiple Instruments in Financing the Management Buyout. Concluding Comments. Appendix 10-A: Calculating the Cost of Capital in a Transaction Involving Debt, Preferred Stock, and/or Common Stock. Endnotes.

CHAPTER 11: MANAGING MULTIPLE SOURCES - NEGOTIATING POINTS

Introduction. Multiple Sources vs. "One-Stop Shopping." Dealing with Multiple Lenders. Resolving Intercreditor Conflicts. Drafting Intercreditor Agreements. Concluding Comments. Endnotes.

CHAPTER 12: REFINANCING STRATEGIES

Introduction. Refinancing Overview. Debt Refinancing: Working Capital, Loans, Bonds, and Notes. Equity Refinancing. Refinancing via Hybrid Instruments: Bridge Loans. Fraudulent Conveyance and Other Litigation Concerns. Concluding Comments. Appendix 12-A: Sample Description (for a 10-K Filing) of a Complex Financial Restructuring. Endnotes.

PART FIVE Global Issues: Macro/Micro/Tax

CHAPTER 13: MACROECONOMIC ASPECTS OF GLOBAL M&A FINANCING

Introduction. World Financial Systems: The Big Picture. Foreign Exchange Control Laws. Concluding Comments. Endnotes.

CHAPTER 14: MICROECONOMIC ASPECTS OF GLOBAL M&A FINANCING

Introduction. Global Financing: Legal Basics. Availability of Global M&A Financing. Instruments in Global M&A Financing. Security Interests in Foreign Assets. International LBOs. Concluding Comments. Endnotes.

CHAPTER 15: TAX ISSUES IN INTERNATIONAL FINANCING

Introduction. Fundamentals of Entity Classification in the Global Deal. Tax Considerations in Inbound Acquisitions. Tax Considerations in Outbound Acquisitions. Concluding Comments. Endnotes.

CONCLUSION M&A FINANCING AND REFINANCING: INSTRUMENTS FOR SUCCESSFUL GROWTH

APPENDICES

Typical Subordination Provisions of Publicly Issued Notes. Typical Subordination Provisions of Privately Placed Institutional Notes. Typical Subordination Provisions of Seller Notes.

INDEX

From the Back Cover:

State-of-The-Art strategies to obtain and repay the financing you need to grow your business. Ideas may be the brain and personnel the muscle, but money is the lifeblood that allows a company to flourish in today's crowded global marketplace. In The Art of M&A Financing and Refinancing, today's preeminent M&A authorities Alexandra Reed Lajoux
and J. Fred Weston take you straight to the sources of that money, drawing on their considerable combined expertise to clarify every aspect of the use of outside financing to expand a company. In the clear, concise Q&A format that has become a hallmark of McGraw-Hill's Art of M&A series, Lajoux and Weston explain how to develop a strategic vision for M&A financing and how to use the correct tools to turn that
vision into a reality. They detail key topics such as: how to chosse and locate the most appropriate type of financing debt, equity, or hybrid; the roles of the intermediaries backers, lenders, or underwriters who play such a vital role in M&A financing; legal, tax, and accounting questions commonly encountered while financing a
merger. The financing of mergers and acquisitions, whether local mom-and-pop collaborations or multibillion dollar global megadeals, is indispensable to survival and growth for many companies in today's highly competitive economic climate. The Art of M&A Financing and Refinancing covers the entire spectrum from basic definitions of financing to taxation of international deals and makes understandable
the complex, technical aspects of M&A financing and refinancing.

About this edition

• Publisher: McGraw-Hill Education
• Publication date: 1999
• ISBN 10: 0070383030
• ISBN 13: 9780070383036
• Binding: Hardcover
• Number of pages: 288