Material Adverse Change: Lessons from Failed M&As

THE SECRET TO REDUCING RISK AND OPTIMIZING VALUE IN M&A DEALS

Material Adverse Change improves your merger and acquisition (M&A) skillset by showcasing the prevalent causes of failed deals through real world examinations into an illuminating collection of the biggest failures around the world.

Written by an industry influencer with more than two decades of experience at the highest levels of practice and academia, this game–changing guide takes you inside the real causes of M&A breakdowns so you can master the soft skills and techniques driving today′s most successful deals. This single authoritative resource shows you:

The ins and outs of the material adverse change (MAC) clause and why this underused part of the contract is critical to reducing risk and arriving at better outcomes. A behind–the–scenes look at how forward–thinking organizations are positively growing from an increasing trend in cross–border M&A deals. Exactly what you need to do to drive M&A excellence, including how to be more sensitive to the impact of different cultures on deals, and suggestions on how to improve your negotiating skills to drive better outcomes.

The due diligence for your next M&A deal starts with Material Adverse Change. This step–by–step guide shows you how to:

Optimize the time between signing and closing in a continuing era of MAC clauses becoming more restrictive and harder to enforce Strategically anticipate the impact that culture, due diligence and the regulatory framework play in your M&A negotiations in order to both save the deal and avoid paying costly fees Take negotiations beyond the legal contract to find pragmatic solutions to problems encountered that can prevent good deals from falling apart

A signed contract doesn′t make a done deal, and with Material Adverse Change, you can fine tune your negotiations to ensure positive outcomes.

Introduction: The Risks and Opportunities of Doing a Deal xi

CHAPTER 1 Why Bad Deals Happen 1

A Practical Approach to Mergers and Acquisitions 3

A Case Study: RBS Buys ABN AMRO 4

Motivations for Deals 5

A Case Study: Bank of America Buys Merrill Lynch 5

Using M&A to Divert Attention 12

Using M&A to Grow Quickly 12

Using M&A to Solve Problems 13

Horizontal and Vertical Mergers 14

Conclusion 16

CHAPTER 2 Buy or Build? 19

A Case Study: Commerce Bank 21

A Case Study: Metro Bank 26

Is There Anything in Between? 29

A Case Study: Dow Corning Joint Venture 31

A Case Study: Bucknell Industries 32

Conclusion 34

CHAPTER 3 Let the Buyer Beware 37

Wachovia Buys Golden West 40

AOL Time Warner Merger 46

Wells Fargo Buys Wachovia 48

CHAPTER 4 The Opportunities and Risks of Expanding Your Business Globally 51

Telenor India Joint Venture 54

Telenor s Global Strategy over Time 56

Telenor Expands into Eastern Europe 57

Telenor Pushes into Asia 59

The Telenor Unitech Joint Venture 61

Postmortem on the Telenor Unitech Joint Venture 63

Lessons Learned 64

Trends for the Future 67

CHAPTER 5 Culture Is Critical 69

A Case Study from China 71

A Case Study from Japan 74

A Summary of Other Best Practices 76

CHAPTER 6 Who Is Behind the Curtain? 85

A Case Study: Lloyds HBOS 87

A Case Study: Kraft Buys Cadbury 96

CHAPTER 7 Is It Too Late to Back Out? 103

Case Study One: Bank of America Purchases Merrill Lynch 106

Case Study Two: AT&T/T Mobile 110

Case Study Three: Verizon Bids for Yahoo 115

Conclusion 116

CHAPTER 8 How to Negotiate a Better Deal 119

Ten Best Practices for Effective Negotiation 124

CHAPTER 9 Making It Right 135

Background 137

Be Strategic 138

Maintain a Rational Organizational Structure 140

Structure the Deal Properly 141

Recognize the Importance of Brand 142

Efficient Distribution 143

Beware of Culture 144

Have Financing Lined Up in Advance 145

Establish an Appropriate M&A Approval Process 145

Integrate Early and Often 146

Clear Legal and Regulatory Process 146

Don t Overpay 147

Continuous Learning 148

A Case Study: J.P. Morgan Buys Bear Stearns 148

Conclusion 152

CHAPTER 10 Where Do We Go from Here? 155

How Fast We Forget 157

APPENDIX A Trinity International/American Public Media Group: Material Adverse Change Clause 169

APPENDIX B Bank of America/Merrill: Material Adverse Change Clause 171

About the Author 175

Index 177

ROBERT V. STEFANOWSKI is an independent consultant on business strategy, leadership, finance, and M&A throughout North America, Europe, and Asia. A current member of the McKinsey & Company Mergers & Acquisitions Advisory Board, he′s also been President and CEO of numerous business units at General Electric Company and CFO of UBS Investment Bank. A Visiting Professor of Management Practice at Oxford University, he is the author of Making M&A Deals Happen.