Merger & Acq

Part

I

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The Mergers and

Acquisitions Environment

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Chapter 1: Introduction to

Mergers, Acquisitions, and

Other Restructuring Activities

Chapter Summary and Learning Objectives

The purpose of this chapter is to provide students with an understanding of the underlying dynamics of the M&A process. This includes developing a working knowledge of the relevant vocabulary, the role of various participants in the M&A process, and the various factors affecting M&A activity historically. The chapter also addresses why mergers and acquisitions take place and the common reasons why M&As may fail to achieve expectations.

Chapter 1 Learning Objectives: Providing students with an understanding of

1. What corporate restructuring is and why it occurs;

2. Commonly used M&A vocabulary;

3. Key participants in the M&A process;

4. M&A as only one of a number of strategic options for increasing shareholder value;

5. Common motivations for M&A activity;

6. Historical mergers and acquisitions waves;

7. The Impact of M&A on shareholders and society; and

8. Commonly cited reasons for M&As frequent failure to meet expectations.

Learning Objective 1: Understanding what corporate restructuring is and why it occurs

Corporate Restructuring: This term is a catchall referring to a broad array of activities intended to expand or contract a firm’s basic operations or fundamentally change its asset or financial structure. It is often referred to as either operational or financial restructuring.

• Operational restructuring may include the following:

--Downsizing through layoffs or attrition the number of employees required to support

specific operations or closing of unprofitable or non-strategic operations;

--The partial or complete divestiture (i.e., sale) or spin-off (i.e., non-taxable transfer of a...