Mergers and Acquisitions Certification

The Final Certification

1 The Acquisition Process
2 Key Participants
3 Valuing an Acquisition Target
4 The Term Sheet
5 Due Diligence
6 The Purchase Agreement
7 The Acquisition Integration Process
8 Accounting for Acquisitions
9 Types of Acquisitions
10 Government Regulation

Appendix A: Due Diligence Checklist

ertification
n
1 The Acquisition Process (12-
51 Page)
Why We Acquire 

Why a Target Sells 

Acquisition Strategy 
The Basic Acquisition Process Flow 
The Auction Process Flow 
Locating and Culling Acquisition
Targets 
The Optimal Target Size 
Evaluate Acquisition Targets with
Acquisition Risks for the Buyer—
Alliances 
Acquisition Risks for the Buyer—
Valuation 
Legal 
Acquisition Risks for the Seller 
Acquisition Follow-Up Activities 
The Hostile Takeover 
Defending Against a Hostile
Takeover 
Summary
1.Business model 2. Cyclicality reduction 3. Defensive 4. Executive compensation 5. IP 6. Internal development alternative 7. Lo
expertise 8. Market growth 9. Production capacity 10. Products 11. Regulatory environment 12. Sales channels 13. Vertical inte
 2 Key Participants
The Acquisition Team 
Attorneys 
Board of Directors 
Brokers 
The Chief Executive Officer 
Investment Bankers 
Investor and Public Relations 
Lenders 
Line Managers 
Specialist Consultants 
Players in Hostile Takeovers 
Integration Team 
Summary
53-66
 3 Valuing an Acquisition Target
Alternative Valuation Methods 
The Control Premium 
Synergy Gains 
The Discounted Cash Flow (DCF)
Model 
Constructing Cash Flow Scenarios 
Cash Flow Adjusting Factors 
The Earnout 
Qualitative Factors 
Which Valuation Method is Best? 
The Method of Payment 
Summary
68-93
4 The Term Sheet
Reasons for Using a Term Sheet  94 - 103
Components of a Term Sheet 
Summary
5 Due Diligence
Due Diligence Team Staffing 
Due Diligence Interviews 
Due Diligence—Overview 
Due Diligence—Market Overview 
Due Diligence—Culture 
Due Diligence—Personnel 
Due Diligence—Intellectual Property 
Due Diligence—Brands 
Due Diligence—Risk Management 
Due Diligence—Capacity 
Due Diligence—Assets 
Due Diligence—Liabilities 
Due Diligence—Equity 
Due Diligence—Profitability 
Due Diligence—Cash Flow 
Due Diligence—Customers 
Due Diligence—Product Development 
Due Diligence—Production Process 
Due Diligence—Information Technology 
Due Diligence—Legal Issues 
Due Diligence for a Business Segment 
Due Diligence—Forecasts 
Due Diligence—Missing Information 
Complexity Analysis 
Due Diligence—Red Flags 
Due Diligence—Seller’s Perspective 
Due Diligence—Documentation 
Summary
 6 The Purchase Agreement
Components of a Purchase Agreement 
The Merger Section 
The Letter of Transmittal Section 
The Representations and Warranties Section—
Seller 
The Representations and Warranties Section—
Buyer 
The Survival of Representations and
Warranties Section 
The Conduct of Business Section 
The Additional Agreements Section 
The Closing Section 
The Termination Prior to Closing Section 
The Supporting Documents Section 
Exhibits 
The Seller Disclosure Schedule 
The Closing Memorandum 
Special Clauses 
Post-Closing Activities 
Negotiating the Purchase Agreement 
Mechanics of the Close 
Summary
eement
7 The Acquisition Integration Process
Integration Timing 
Integration Planning 
Synergy Realization 
The Integration Manager 
The Integration Team 
Integration Communications—Internal 
Integration Communications—External 
Anger Management 
Progress Reporting—External 
Cultural
Employee Issues 
Integration—Qualification
Assessment 
Employee Integration—Job Positioning 
Employee Integration—Relocations 
Employee Integration—Key Employees 
Employee Integration—Founders 
Employee Integration—Unions 
Layoffs 
Compensation Integration 
Sales Integration 
Process Integration 
Technology Integration 
Controls Integration 
Board Integration 
Integration Metrics 
Integration Pacing 
Summary
ess
 8 Accounting for Acquisitions
Purchase Price Allocation 
Fair Value Determination 
Intangibles Identification 
Duplicative Assets and Assets Targeted for Disposition 
Example of the Accounting for an Acquisition (with
Goodwill) 
Example of the Accounting for an Acquisition (with no
Goodwill) 
Initial Goodwill Impairment Testing 
Ongoing Goodwill Impairment Testing 
Example of Goodwill Impairment Testing 
Timing of Annual Goodwill Impairment Testing 
Push-Down Accounting 
Summary
ns
 9 Types of Acquisitions
The Tax Implications of a
Acquisition 
The Asset Acquisition 
The Type ‘‘A’’ Reorganization 
The Type ‘‘B’’ Reorganization 
The Type ‘‘C’’ Reorganization 
The Type ‘‘D’’ Reorganization 
The Triangular Merger 
The Reverse Triangular Merger 
The All-Cash Acquisition 
Appraisal Rights 
Summary
 10 Government Regulation
Anti-Trust Regulations 
International Anti-Trust
Regulations 
Environmental Regulations 
Summary