| Preface |
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xxiii | |
| Acknowledgments |
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xxix | |
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PART ONE Middle Market Overview |
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1 | (44) |
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Chapter 1 The Middle Market |
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3 | (8) |
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4 | (1) |
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5 | (2) |
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Characteristics of Middle Market Companies |
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7 | (4) |
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7 | (1) |
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Access to and Use of Capital |
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8 | (1) |
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8 | (3) |
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Chapter 2 Private Capital Markets |
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11 | (20) |
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12 | (5) |
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How Market Players View Risk |
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17 | (9) |
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17 | (1) |
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Owners' and Managers' Views of Risk/Return |
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18 | (2) |
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20 | (6) |
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26 | (5) |
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Chapter 3 Valuation Perspectives for the Private Markets |
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31 | (14) |
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Private Business Valuation Can Be Viewed Through Different Standards of Value |
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32 | (9) |
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34 | (3) |
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37 | (1) |
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37 | (1) |
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37 | (1) |
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Incremental Business Value |
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38 | (1) |
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38 | (1) |
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39 | (1) |
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39 | (1) |
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39 | (1) |
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39 | (2) |
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Why the Different Versions of Value? |
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41 | (1) |
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Valuation as a Range Concept |
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42 | (1) |
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43 | (2) |
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PART TWO Fop the Business Owner/Operator and Entrepreneur |
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45 | (30) |
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Chapter 4 Transition, Succession, and Exit Planning |
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47 | (8) |
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49 | (4) |
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1 Owner Ambitions and Goals |
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50 | (1) |
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51 | (1) |
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52 | (1) |
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53 | (1) |
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53 | (2) |
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Chapter 5 Value Growth and Optimization |
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55 | (20) |
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Increasing the Return on Invested Capital |
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57 | (5) |
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58 | (1) |
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59 | (1) |
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Cost Structure and Scalability |
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60 | (1) |
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60 | (1) |
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61 | (1) |
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Reducing the Risk of Investment |
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62 | (5) |
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63 | (1) |
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Growth Plans and Relative Position |
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63 | (1) |
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63 | (2) |
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Predictability of Revenues and Earnings |
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65 | (1) |
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65 | (1) |
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66 | (1) |
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67 | (1) |
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Ease the Transfer of Ownership |
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67 | (4) |
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68 | (1) |
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69 | (1) |
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69 | (1) |
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Corporate Structure and Attributes |
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70 | (1) |
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Don't Lose Focus on the Core Business |
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70 | (1) |
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71 | (4) |
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72 | (3) |
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PART THREE The M&A Practice and Processes |
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75 | (102) |
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Chapter 6 Practice Management |
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77 | (21) |
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78 | (2) |
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Marketing the M&A Practice |
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80 | (3) |
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80 | (1) |
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81 | (1) |
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Marketing and Advertising |
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81 | (1) |
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Pretransaction Consulting |
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82 | (1) |
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82 | (1) |
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Other Consulting Services |
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82 | (1) |
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82 | (1) |
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83 | (1) |
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84 | (1) |
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84 | (14) |
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Identification of the Parties |
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85 | (1) |
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85 | (1) |
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Limitations and Disclosures |
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86 | (1) |
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86 | (2) |
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88 | (1) |
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89 | (1) |
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89 | (1) |
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Licensure Issues in the M&A Business |
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90 | (8) |
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Chapter 7 Sell-Side Representation and Process |
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98 | (29) |
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93 | (1) |
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Step 1 Preliminary Discussions with Seller |
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94 | (3) |
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95 | (1) |
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95 | (1) |
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96 | (1) |
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97 | (3) |
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Step 3 Industry Research and Identifying Buyers |
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100 | (1) |
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101 | (1) |
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Step 4 The Marketing Book |
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101 | (5) |
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103 | (1) |
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104 | (1) |
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105 | (1) |
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Specific EBITDA Presentations |
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105 | (1) |
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Balance Sheet Presentation |
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105 | (1) |
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Other Financial Disclosures |
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106 | (1) |
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Prospective Financial Presentation |
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106 | (1) |
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106 | (3) |
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Clear the List with the Seller |
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107 | (1) |
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Initiate Contact with Buyers |
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107 | (1) |
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Obtain Nondisclosure Agreements |
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108 | (1) |
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108 | (1) |
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Follow Up, Discuss, and Set Expectations |
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108 | (1) |
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Step 6 The Auction Dynamic and Negotiations |
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109 | (4) |
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109 | (2) |
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111 | (1) |
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112 | (1) |
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Step 7 Buyer Interest and Transaction Structure |
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113 | (7) |
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114 | (1) |
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Indication of Interest (IOI) |
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114 | (1) |
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114 | (2) |
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116 | (1) |
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Asset versus Stock Structure |
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116 | (1) |
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Other Tax Deferral Techniques |
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117 | (3) |
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120 | (1) |
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Step 9 Definitive Agreements |
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121 | (1) |
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122 | (5) |
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Price and Valuation Changes |
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123 | (1) |
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Terms and Conditions Changes |
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123 | (1) |
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123 | (1) |
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124 | (1) |
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Other Preclosing Mistakes |
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124 | (1) |
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124 | (3) |
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Chapter 8 Corporate Development and the Buy-Side Process |
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127 | (24) |
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129 | (3) |
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130 | (1) |
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131 | (1) |
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132 | (14) |
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133 | (1) |
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134 | (1) |
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The Balance between a Deep Dive and Locking In the Deal |
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135 | (1) |
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Lower-Middle Market versus Middle Market Deals |
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136 | (1) |
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Valuation from a Strategic's Perspective |
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137 | (3) |
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Structuring the Transaction |
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140 | (1) |
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141 | (1) |
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141 | (3) |
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144 | (2) |
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Practical Tips and What Causes Deals to Fail |
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146 | (5) |
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146 | (1) |
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147 | (1) |
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147 | (1) |
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Recruit the Right Advisors Early |
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148 | (1) |
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Allocate Enough Resources |
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148 | (1) |
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Every Interaction Is a Negotiation |
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149 | (1) |
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If It Can Go Wrong, It Will Go Wrong |
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149 | (2) |
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Chapter 9 Buy-Side Representation |
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151 | (6) |
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151 | (1) |
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152 | (1) |
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153 | (1) |
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154 | (1) |
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154 | (2) |
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156 | (1) |
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156 | (1) |
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Chapter 10 Technology In the M&A Process |
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157 | (11) |
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158 | (1) |
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159 | (3) |
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Deal Sourcing and Exchanges |
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162 | (1) |
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163 | (1) |
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Project Management Software |
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164 | (1) |
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Comprehensive M&A Software |
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164 | (1) |
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165 | (1) |
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Artificial Intelligence and Technology Trends |
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165 | (2) |
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167 | (1) |
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Chapter 11 Professional Standards and Ethics |
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168 | (9) |
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171 | (1) |
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Ethical and Professional Standards |
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172 | (3) |
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Competence and Professionalism (Reputation) |
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173 | (1) |
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Best Practices (Activities) |
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173 | (1) |
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Ethics (Behavioral Boundaries) |
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174 | (1) |
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The Middle Market Standard |
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175 | (2) |
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PART FOUR M&A Technical Discussions |
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177 | (700) |
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Chapter 12 Financial Analysis |
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178 | (7) |
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Financial Reporting Motivation |
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179 | (2) |
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181 | (3) |
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184 | (1) |
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185 | (5) |
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190 | (5) |
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Chapter 13 Market Valuation |
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195 | (1) |
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196 | (1) |
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Determine the Value Subworld |
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196 | (1) |
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Calculate the Benefit Stream |
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197 | (8) |
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203 | (2) |
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Determine Private Return Expectation |
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205 | (3) |
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206 | (1) |
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General Acquisition Selling Multiples |
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207 | (1) |
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208 | (10) |
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Chapter 14 Doal Structure |
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218 | (11) |
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213 | (11) |
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Business and Economic Terms |
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214 | (4) |
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218 | (4) |
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222 | (2) |
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224 | (5) |
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Initial Analysis of Both Entities |
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224 | (1) |
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225 | (1) |
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225 | (1) |
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Understanding Cost, Operational, and Cultural Differences |
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226 | (1) |
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Developing the Integration Plan |
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227 | (1) |
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Deal Structure and Negotiations |
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227 | (2) |
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Chapter 15 Financing Sources and Capital Structure |
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229 | (26) |
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229 | (1) |
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230 | (7) |
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230 | (4) |
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Factors Shaping the Capital Structure |
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234 | (3) |
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237 | (8) |
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237 | (5) |
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242 | (1) |
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243 | (2) |
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Sources and Types of Funding |
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245 | (5) |
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246 | (3) |
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249 | (1) |
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250 | (5) |
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255 | (16) |
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256 | (1) |
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256 | (15) |
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Traditional Due Diligence |
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257 | (1) |
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258 | (1) |
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Quality of Earnings Analysis |
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258 | (2) |
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260 | (1) |
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260 | (1) |
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261 | (1) |
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Audited Financial Statements |
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261 | (1) |
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262 | (1) |
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Tax Structuring and Compliance |
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262 | (1) |
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Compensation and Benefits |
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263 | (1) |
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264 | (2) |
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266 | (1) |
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267 | (4) |
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Chapter 17 Tax Provisions Used In M&A |
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271 | (537) |
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272 | (3) |
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275 | (12) |
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275 | (2) |
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277 | (1) |
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Stock versus Asset Sale Example |
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278 | (2) |
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Asset Transaction Details |
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280 | (5) |
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285 | (2) |
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287 | (6) |
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287 | (1) |
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288 | (1) |
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Assets That Qualify for Installment Treatment |
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288 | (1) |
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Installment Planning Opportunity |
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289 | (1) |
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289 | (1) |
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General Partnership Doctrine |
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290 | (1) |
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Partnership versus's Corporation |
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290 | (2) |
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Partnership Gain Tracking Rules |
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292 | (1) |
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Purchase Price Allocation for Partnership Buyers |
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293 | (1) |
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293 | (9) |
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Contributions to Corporations |
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294 | (1) |
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Stock/Asset Sale Election: Section 338 |
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295 | (1) |
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Mergers and Reorganizations |
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296 | (4) |
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300 | (2) |
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Tax Glossary and Reference |
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302 | (506) |
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Chapter 18 Legal Documentation |
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808 | (20) |
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309 | (2) |
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Preliminary Legal Documents |
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311 | (5) |
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Nondisclosure and Confidentiality Agreement |
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311 | (1) |
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312 | (4) |
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316 | (1) |
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316 | (2) |
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316 | (1) |
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317 | (1) |
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Representations and Warranties |
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318 | (4) |
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Qualifications to Representations and Warranties |
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319 | (1) |
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320 | (1) |
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321 | (1) |
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Consulting and Employment Agreements |
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322 | (1) |
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322 | (506) |
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Chapter 19 Regulation and Compliance |
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828 | (30) |
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Protecting Investors: Securities Act of 1933 |
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324 | (5) |
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Exemptions under the 33 Act |
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326 | (1) |
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Commonly Used Private Placement Exemptions |
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327 | (2) |
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Keeping The Markets Honest: Securities Exchange Act of 1934 |
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329 | (2) |
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329 | (1) |
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330 | (1) |
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Antitrust Issues and Laws You May Encounter in the Deal |
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331 | (3) |
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332 | (1) |
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Transactions Involving Foreign Investors, Foreign Trade, and National Defense Matters |
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333 | (1) |
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Other Regulatory Issues and Laws You May Encounter in the Deal |
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334 | (2) |
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334 | (1) |
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335 | (1) |
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The Investment Banker's Perspective |
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336 | (14) |
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SEC Provisions Regulating Broker-Dealers |
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336 | (2) |
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M&A Brokers No-Action Letter |
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338 | (6) |
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344 | (1) |
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Investment Advisers Act and Investment Company Act of 1940 |
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345 | (2) |
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FINRA Provisions for Broker-Dealers |
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347 | (3) |
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The Company's Perspective |
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350 | (5) |
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Process of Issuing, Selling, or Exchanging Securities for a Deal |
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351 | (3) |
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354 | (1) |
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Considerations for Public Companies |
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355 | (503) |
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Chapter 20 Cross-Border Considerations |
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858 | (19) |
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Is Cross-Border M&A the Right Move? |
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360 | (1) |
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361 | (4) |
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365 | (1) |
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365 | (2) |
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Market and Operational Risks |
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367 | (1) |
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367 | (3) |
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370 | (1) |
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371 | (1) |
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372 | (1) |
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372 | (3) |
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375 | (42) |
| Glossary |
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417 | (1) |
| Notes |
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417 | (1) |
| About the Authors |
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418 | (9) |
| About the Contributors and Reviewers |
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427 | (18) |
| Index |
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445 | |