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Applied Mergers and Acquisitions
ROBERT F. BRUNER
Copyright © 2004 by Robert F. Bruner. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Bruner, Robert F, 1949–
Applied mergers and acquisitions / Robert F. Bruner.
p. cm.
Includes index.
ISBN 0-471-39506-4 (cloth/CD-ROM) — ISBN 0-471-39505-6 (cloth) — 0-471-395064 (university)
1. Consolidation and merger of corporations. I. Title.
HD2746.5.B783 2004
658.1’62—dc22
2003020246
ToJonathan E. BrunerandAlexander W. Bruner
| 1221 | Hafast þū gefēred, pæt ðē feor ond nēah Ealne wītde-ferhð weras ehtigað, Efne swā sīde swā sæ bebūgeð Wind-geard, weallas. Wes, þenden þū lifige, Æþeling, ēadig! Ic þē an tela Sinc-gestrēona. Bēo þū suna mīnum Dædum gedēfe, drēam-healdende! Hēr is æghwylc eorl ōþrum getrŷ we, mōdes milde, man-drihtne hold; | |
| 1841 | þē þā word-cwydas wigtig Drihten On sefan sende; |
Bēowulf
About the Author
Robert F. Bruner is Distinguished Professor of Business Administration and Executive Director of the Batten Institute at the Darden Graduate School of Business Administration, University of Virginia. He teaches the course “Mergers and Acquisition” in Darden’s MBA program, and is the faculty director of Darden’s executive education program, “Mergers and Acquistions.” He has received numerous awards for teaching and casewriting in the United States and Europe. BusinessWeek magazine cited him as one of the “masters of the MBA classroom.” He is the author or co-author of over 400 case studies and notes, and of Case Studies in Finance: Managing for Corporate Value Creation, now in its fourth edition. His research has been published in journals such as Financial Management, Journal of Accounting and Economics, Journal of Applied Corporate Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, and Journal of Money, Credit, and Banking. Industrial corporations, financial institutions, and government agencies have retained him for counsel and training. He has served the Darden School, professional groups, and community organizations in various positions of leadership. Copies of his papers and essays may be obtained via his web site, http://faculty.darden.edu/brunerb/. He may be reached by e-mail at [email protected].
Foreword
1 Joseph R. PerellaChairman of Institutional Securities GroupMorgan Stanley
The Chinese expression for crisis—wei ji—combines the character “risk” with the character “opportunity.” Mergers and acquisitions (M&A) transactions are opportunities that bear some considerable risk. For more than 30 years as an M&A professional, I have encountered many opportunities and risks; but I am still as excited about my work as when I started in this business in 1972. Nonetheless, things have changed since then.
The M&A environment has always been a fast-paced, highly complex world where transactions can be arranged in a matter of days and where the values involved often exceed billions of dollars. For more than two decades, M&A activities have captured the general attention of the public and motivated many young, intelligent, and ambitious people to pursue careers as M&A professionals at investment banks, consulting companies, and law firms across the world. In fact, the flow of M&A business reached unprecedented levels in the late 1990s. In 2000, the dollar volume of worldwide M&A activities reached approximately $3.2 trillion through over 3,000 transactions. Of these, approximately half involved U.S. parties and seven transactions had values of $10 billion or more, including the Time Warner/America Online transaction valued at $182 billion. Two years later, the dollar volume of worldwide M&A activity was one-third of the 2000 peak, at approximately $1.0 trillion.1 It is uncertain if we will revisit the levels attained in 2000 again, but no one doubts that M&A activity is an integral part of corporate strategy.
It is important to realize that popular images are often mistaken. The M&A world is not full of Gordon Gecko types expounding that “greed is good.” The real M&A world is built upon hard analysis and research, continuous dialogue among corporate officers, board members, and in many cases external advisers. It is also a world