Introduction

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Part I discusses the context in which mergers, acquisitions, and corporate restructuring occur, including factors often beyond the control of the participants in the M&A process. Chapter 1 provides an overview of mergers and acquisitions by discussing basic vocabulary, the most common reasons why M&As happen, how such transactions occur in a series of somewhat predictable waves, and participants in the M&A process, from investment bankers to lenders to regulatory authorities.

The chapter also addresses whether M&As benefit shareholders, bondholders, and society, with conclusions based on recent empirical studies. The labyrinth of regulations that impact the M&A process is addressed in Chapter 2, including U.S. federal and state securities and antitrust laws, as well as environmental, labor, and benefit laws that add to the increasing complexity of such transactions. The implications of cross-border transactions, which offer an entirely new set of regulatory challenges, also are explored. Viewed in the context of a market in which control transfers from sellers to buyers, Chapter 3 addresses common takeover tactics employed as part of an overall bidding strategy, the motivation behind such tactics, and the defenses used by target firms to deter or delay such tactics. Bidding strategies are discussed for both friendly and unwanted or hostile business takeovers. In hostile transactions, the corporate takeover is viewed as a means of disciplining underperforming management, improving corporate governance practices, and reallocating assets to those who can use them more effectively.

The reader is encouraged to read about transactions currently in the news and to identify the takeover tactics and defenses employed by the parties to the transactions. One's understanding of the material can be enriched by attempting to discern the intentions of both the acquiring and target firms' boards and management and thinking about what you might have done differently to achieve similar goals.