并购基础知识一切你需要知道的--外文翻译_企业并购.doc

并购基础知识：一切你需要知道的-外文翻译_企业并购 外文文献Mergers and Acquisitions Basics :All You Need To KnowIntroduction to Mergers and AcquisitionsThe first decade of the new millennium heralded an era of global mega-mergers. Like the mergers and acquisitions M&As frenzy of the 1980s and 1990s, several factors fueled activity through mid-2007: readily available credit, historically low interest rates, rising equity markets, technological change, global competition, and industry consolidation. In terms of dollar volume, M&A transactions reached a record level worldwide in 2007. But extended turbulence in the global credit markets soon followed. The speculative housing bubble in the United States and elsewhere, largely financed by debt, burst during the second half of the year. Banks, concerned about the value of many of their own assets, became exceedingly selective and largely withdrew from financing the highly leveraged transactions that had become commonplace the previous year. The quality of assets held by banks through out Europe and Asia also became suspect, reflecting the global nature of the credit markets. As credit dried up, a malaise spread worldwide in the market for highly leveraged M&A transactions. By 2008, a combination of record high oil prices and a reduced availability of credit sent most of the worlds economies into recession, reducing global M&A activity by more than one-third from its previous high. This global recession deepened during the first half of 2009?despite a dramatic drop in energy prices and highly stimulative monetary and fiscal policies?extending the slump in M&A activity. In recent years, governments worldwide have intervened aggressively in global credit markets as well as in manufacturing and other sectors of the economy in an effort to restore business and consumer confidence, restore credit market functioning, and offset deflationary pressures. What impact have such actions had on mergers and acquisitions? It is too early to tell, but the implications may be significant. M&As are an important means of transferring resources to where they are most needed and of removing underperforming managers. Government decisions to save some firms while allowing others to fail are likely to disrupt this process. Such decisions are often based on the notion that some firms are simply too big to fail because of their potential impact on the economy?consider AIG in the United States. Others are clearly motivated by politics. Such actions disrupt the smooth functioning of markets, which rewards good decisions and penalizes poor ones. Allowing a business to believe that it can achieve a size “too big t o fail” may create perverse incentives. Plus, there is very little historical evidence that governments are better than markets at deciding who should fail and who should survive. In this chapter, you will gain an understanding of the underlying dynamics of M&As in the context of an increasingly interconnected world. The chapter begins with a discussion of M&As as change agents in the context of corporate restructuring. The focus is on M&As and why they happen, with brief consideration given to alternative ways of increasing shareholder value. You will also be introduced to a variety of legal structures and strategies that are employed to restructure corporations. Throughout this book, a firm that attempts to acquire or merge with another company is called an acquiring company, acquirer, or bidder. The target company or target is the firm being solicited by the acquiring company. Takeovers or buyouts are generic terms for a change in the controlling ownership interest of a corporation. Words in bold italics are the ones most important for you to understand fully;they are all included in a glossary at the end of the book.Mergers and Acquisitions as Change AgentsBusinesses come and go in a continuing churn, perhaps best illustrated by the ever-changing composition of the so-called Fortune 500?the 500 largest U.S. corporations. Only 70 of the firms on the original 1955 list of 500 are on todays list, and some 2,000 firms have appeared on the list at one time or another. Most have dropped off the list either through merger, acquisition, bankruptcy, downsizing, or some other form of corporate restructuring. Consider a few examples: Chrysler, Bethlehem Steel, Scott Paper, Zenith, Rubbermaid, Warner Lambert. The popular media tends to use the term corporate restructuring to describe actions taken to expand or contract a firms basic operations or fundamentally change its asset or financial structure.?SynergySynergy is the rather simplistic notion that two or more businesses in combination will create greater shareholder value than if they are operated separately. It may be measured as the incremental cash flow that can be realized through combination in excess of what would be realized were the firms to remain separate. There are two basic types of synergy: operating and financial.Operating Synergy Economies of Scale and ScopeOperating synergy comprises both economies of scale and economies of scope, which can be important determinants of shareholder wealth creation. Gains in efficiency can come from either factor and from improved managerial practices. Spreading fixed costs over increasing production levels realizes economies of scale, with scale defined by such fixed costs as depreciation of equipment and amortization of capitalized software; normal maintenance spending; obligations such as interest expense, lease payments, and long-term union, customer, and vendor contracts; and taxes. These costs are fixed in that they cannot be altered in the short run. By contrast, variable costs are those that change with output levels. Consequently, for a given scale or amount of fixed expenses, the dollar value of fixed expenses per unit of output and per dollar of revenue decreases as output and sales increase. To illustrate the potential profit improvement from economies of scale, lets consider an automobile plant that can assemble 10 cars per hour and runs around the clock?which means the plant produces 240 cars per day. The plants fixed expenses per day are $1 million, so the average fixed cost per car produced is $4,167 i.e., $1,000,000/240. Now imagine an improved assembly line that allows the plant t o assemble 20 cars per hour, or 480 per day. The average fixed cost per car per day falls to $2,083 i.e., $1,000,000/480. If variable costs e.g., direct labor per car do not increase, and the selling price per car remains the same for each car, the profit improvement per car due to the decline in average fixed costs per car per day is $2,084 i.e., $4,167 ? $2,083. A firm with high fixed costs as a percentage of total costs will have greater earnings variability than one with a lower ratio of fixed to total costs. Lets consider two firms with annual revenues of $1 billion and operating profits of $50 million. The fixed costs at the first firm represent 100 percent of total costs, but at the second fixed costs are only half of all costs. If revenues at both firms increased by $50 million, the first firm would see income increase to $100 million, precisely because all of its costs are fixed. Income at the second firm would rise only to $75 million, because half of the $50 million increased revenue would h ave to go to pay for increased variable costs. Using a specific set of skills or an asset currently employed to produce a given product or service to produce something else realizes economies of scope, which are found most often when it is cheaper to combine multiple product lines in one firm than to produce them in separate firms. Procter & Gamble, the consumer products giant, uses its highly regarded consumer marketing skills to sell a full range of personal care as well as pharmaceutical products. Honda knows how to enhance internal combustion engines, so in addition to cars, the firm develops motorcycles, lawn mowers, and snow blowers. Sequent Technology lets customers run applications on UNIX and NT operating systems on a single computer system. Citigroup uses the same computer center to process loan applications, deposits, trust services, and mutual fund accounts for its banks customers. Each is an example of economies of scope, where a firm is applying a specific set of skills or assets to produce or sell multiple products, thus generating more revenue.Financial Synergy Lowering the Cost of CapitalFinancial synergy refers to the impact of mergers and acquisitions on the cost of capital of the acquiring firm or newly formed firm resulting from a merger or acquisition. The cost of capital is the minimum return required by investors and lenders to induce them to buy a firms stock or to lend to the firm. In theory, the cost of capital could be reduced if the merged firms have cash flows that do not move up and down in tandem i.e., so-called co-insurance, realize financial economies of scale from lower securities issuance and transactions costs, or result in a better matching of investment opportunities with internally generated funds. Combining a firm that has excess cash flows with one whose internally generated cash flow is insufficient to fund its investment opportunities may also result in a lower cost of borrowing. A firm in a mature industry experiencing slowing growth may produce cash flows well in excess of available investment opportunities. Another firm in a high-growth industry may not have enough cash to realize its investment opportunities. Reflecting their different growth rates and risk levels, the firm in the mature industry may have a lower cost of capital than the one in the high-growth industry, and combining the two firms could lower the average cost of capital of the combined firms.DiversificationBuying firms outside a companys current primary lines of business is called diversification, and is typically justified in one of two ways. Diversification may create financial synergy that reduces the cost of capital, or it may allow a firm to shift its core product lines or markets into ones that have higher growth prospects, even ones that are unrelated to the firms current products or markets. The extent to which diversification is unrelated to an acquirers current lines of business can have significant implications for how effective management is in operating the combined firms. ?A firm facing slower growth in its current markets may be able to accelerate growth through related diversification by selling its current products in new markets that are somewhat unfamiliar and, therefore, mor risky. Such was the case when pharmaceutical giant Johnson &Johnson announced its ultimately unsuccessful takeover attempt of Guidant Corporation in late 2004. J&J was seeking an entry point for its medical devices business in the fast-growing market for implantable devices, in which it did not then participate. A firm may attempt to achieve higher growth rates by developing or acquiring new products with which it is relatively unfamiliar and then selling them in familiar and less risky current markets. Retailer JCPenneys acquisition of the Eckerd Drugstore chain or J&Js $16 billion acquisition of Pfizers consumer health care products line in 2006 are two examples of related diversification. In each instance, the firm assumed additional risk, but less so than unrelated diversification if it had developed new products for sale in new markets. There is considerable evidence that investors do not benefit from unrelated diversification. Firms that operate in a number of largely unrelated industries, such as General Electric, are called conglomerates. The share prices of conglomerates often trade at a discount?as much as 10 to 15 percent?compared to shares of focused firms or to their value were they broken up. This discount is called the conglomerate discount or diversification discount. Investors often perceive companies diversified in unrelated areas i.e., those in different standard industrial classifications as riskier because management has difficulty understanding these companies and often fails to provide full funding for the most attractive investment opportunities.Moreover, outside investors may have a difficult time understanding how to value the various parts of highly diversified businesses.Researchers differ on whether the conglomerate discount is overstated. Still, although the evidence suggests that firms pursuing a more focused corporate strategy are likely to perform best, there are always exceptions.Strategic RealignmentThe strategic realignment theory suggests that firms use M&As to make rapid adjustments to changes in their external environments. Although change can come from many different sources, this theory considers only changes in the regulatory environment and technological innovation?two factors that, over the past 20 years, have been major forces in creating new opportunities for growth, and threatening, or making obsolete, firms primary lines of business.Regulatory ChangeThose industries that have been subject to significant deregulation in recent years?financial services, health care, utilities, media, telecommunications, defense?have been at the center of M&A activity because deregulation breaks down artificial barriers and stimulates competition. During the first half of the 1990s, for instance, the U.S. Department of Defense actively encouraged consolidation of the nations major defense contractors to improve their overall operating efficiency. Utilities now required in some states to sell power to competitors that can resell the power in the utilitys own marketplace respond with M&As to achieve greater operating efficiency. Commercial banks that have moved beyond their historical role of accepting deposits and g ranting loans are merging with securities firms and insurance companies thanks to the Financial Services Modernization Act of 1999, which repealed legislation dating back to the Great Depression.The Citicorp?Travelers merger a year earlier anticipated this change, and it is probable that their representatives were lobbying for the new legislation. The final chapter has yet t o be written: this trend toward huge financial services companies may yet be stymied by new regulation passed in 2010 in response to excessive risk taking. The telecommunications industry offers a striking illustration. Historically, local and long-distance phone companies were not allowed t o compete against each other, and cable companies were essentially monopolies. Since the Telecommunications Act of 1996, local and long-distance companies are actively encouraged to compete in each others markets, and cable companies are offering both Internet access and local telephone service. When a federal appeals court in 2002 struck down a Federal Communications Commission regulation prohibiting a company from owning a cable television system and a broadcast TV station in the same city, and threw out the rule that barred a company from owning TV stations that reach more than 35 percent of /.seholds, it encouraged new combinations among the largest media companies or purchases of smaller broadcasters.Technological ChangeTechnological advances create new products and industries. The development of the airplane created the passenger airline, avionics, and satellite industries. The emergence of satellite delivery of cable networks t o regional and local stations ignited explosive growth in the cable industry. Today, with the expansion of broadband technology, we are witnessing the convergence of voice, data, and video technologies on the Internet. The emergence of digital camera technology has reduced dramatically the demand for analog cameras and film and sent household names such as Kodak and Polaroid scrambling to adapt. The growth of satellite radio is increasing its share of the radio advertising market at the expense of traditional radio stations. Smaller,