MERGER, ACQUISITION &

CORPORATE RESTRUCTURING
Patrick A. Gaughan
Introduction

FifthMerger Wave ends in 2001

It was a International Wave
Fourth Merger Wave ends in
1990s.
 Introduction
Deal volume in most regions of the
world generally tended to follow
the patterns in the United States
and Europe. Australia, for example,
exhibited such a pattern, with deal
volume growing starting in 2003
but falling off in 2008 and 2009 for
the same reason it fell off in the
United States and Europe.
Picture of Asia remain quite
different.
MERGER AND CONSOLIDATION
MERGER AND CONSOLIDATION
When the combining firms are of
same size the consolidation is
most appropriate word used.
When two firms differ
significantly Merger is used.
Merger is categorized as
Horizontal, Vertical and
Conglomerate.
Types of Mergers
Horizontal Merger: when two
competing firms combine
Example: Exxon and Mobile
Petroleum.

IfMerger is done to increase

power of the firm or to reduce
competition it will be opposed on
antitrust grounds.
Vertical Mergers
A vertical merger is the merger of two or
more companies involved at different
stages in the supply chain process for a
common good or service.  Most often, the
merger is purposed to increase synergies,
gain more control of the supply chain
process, and increase business.  Also, it
often results in reduced costs and
increased productivity and efficiency.

Example: Gul Ahmed

Conglomerate
Conglomerate mergers involve the
combination of corporations involved in
business activities that are completely
unrelated. The two types of conglomerate
merger further define the goal of the
merger:
Pure conglomerate merger – the parties
have absolutely nothing in common
Mixed conglomerate merger – the parties
seek to expand their market regions, or to
extend their product offerings.
Merger Consideration
Transcation can occur in cash,
securities or combination. Or the
firm can use debentures.
Stock for stock ratio.
Floating exchange
Fixed exchange
Contingent Value Right
Holdback Provision
Merger Professionals

•Investment Banker
Leveraged Buyout & Private
Equity Market
Corporate Restructuring
Thedivestiture of investement.
Changing the focus of the
company
Merger Negotiation

FriendlyNegotiation
Keep board of director up to date
Confidentiality
Deal Structure
Asset vs Entity Deal.
Depend upon portion of target
acquisition.
Advantages of Asset deal:
Choosing asset and limiting
liability.
Tax Benefit through lower
depreciation.
Disadvantages: Consent from
other parties & tax implication for
Entity deal
Stocktransaction
Mergers
Advantages of Stock Transaction:
No conveyance issue
No appraisal right
Disadvantages:
Unwanted Liability
Approval from all Stock holder
Forward Triangular Merger

the target merges with and into

the buyer, eliminating the
target’s existence. The buyer
consequently assumes the
target’s rights and liabilities by
operation of law.
Disadvantages of Forward
merger
Buyer assume all the liabilities
Delaware Law treats it as asset
sale
Voting appeal of shareholders of
both the companies.
Solution: Subsidiary Merger
Two types:
Forward Triangular
Reverse Subsidiary
Forward Triangular
Subsidiary
A forward triangular merger, or indirect
merger, is the acquisition of a company
by a subsidiary of the purchasing
company. The acquired company is
merged into this shell company, which
assumes all the target's assets and
liabilities.
Advantages:
No Automatic Voting required
No exposing of asset against liabilities.
Reverse Triangular Merger