Section 338 elections 326
Section 363 sales 479–480
Secured lenders 354–355
Securities Act of 1933 37–38t, 38
Securities and Exchange Commission (SEC) 75, 236
enforcement effectiveness 41
filings 128, 129b
Securities Exchange Act of 1934 37–38t, 38
insider trading regulations 39–40
reporting requirements 38–39
Section 13, periodic reports 39
Section 14, proxy solicitations 39
Securities Investor Protection Corporation (SIPC) 484–485
Securitization 357
Security agreement 354–355
Security provisions 355
Segmented capital markets 496
Self-created property 335–336
Seller Corp. 456
Seller financing 358
Selling entity, legal form of 297, 300
Selling process 445, 447–450
Senior management.  See also Management
risk confronting, basic types of 
financial risk 118–119
operating risk 118–119
overpayment risk 118–119
Settlement tender offer, alternative takeover tactics 82f
Setup costs 6
Share buybacks 92
Share companies 501
Share-exchange ratio (SER) 309, 399, 399b
Shareholder interest’s theory 76, 95–96
Shareholders 13–14, 27, 186–187, 236, 251
impact of leverage on return to 365, 366t
interests hypothesis 76, 93–94
LBO shareholders, postbuyout returns to 363–364
LBO target firm (prebuyout) shareholders, prebuyout returns to 363
postmerger returns 25
premerger returns 22
returns high for target shareholders 23–24
returns to acquirer shareholders 24–25
returns, empirical studies 287–288
Shareholder values 
corporate governance 517
proxy contests 78
takeover defenses, impact of 
leveraged recapitalizations and target firm financial returns 96
public offerings 96
target firm shareholder financial returns 93–96
Shark repellents 87
Sherman Act 45
Shocks, financial 487
Short-form merger 316–317
Short messaging system (SMS) 169
Short-term investors 80
Signal Genetics 290b
Single-firm recapitalizations 317
Small-scale merger exception 316
Social Security and Medicare taxes 268–269
SoftBank 283–284, 283b, 353
Sole proprietorships 477
Solo venture 499, 518
Solvency 487
Sovereign wealth funds (SWFs) 21, 503
Special purpose acquisition corporations (SPACs) 286
Spin-off company 442–443, 458
board governance 459
human resource management 459
nonlong-term debt liabilities, allocation of 459
separation and distribution agreement 460
solvency 459
target capital structure 458–459
tax matters agreement 460
transition agreement 460
Spin-offs 14, 333
characteristics 460–461, 460t
definition 450
disadvantages 450
M&A transactions, combined with 456–457
motives for 450
parent firm operating units, characteristics of 461, 461t
postannouncement financial returns 465–466
preannouncement abnormal returns 462t, 464
increasing focus 464
transparency 464
wealth transfers 464
pro rata distribution 454–455
tax and accounting considerations 452
Split-offs 14, 443
Alcoa Inc. 455
cash-rich split-offs 455–456, 456f
motives for 455
non-pro rata distribution 454–455
Pentair Plc. 455
Split-ups 
characteristics 460–461, 460t
definition 455
Spot exchange rate 505
Squeeze-out/freeze-out merger 315
Staffing 
plans 
development 162, 162f
and timetable 162
strategy sequencing 162f
Staged transactions 317
Staggered/classified board election 87
Stakeholders 103
communication plan development 
communities 161
customers 160
employees 159–160
investors 160–161
lenders 161
suppliers 160
Stalking horse 480
Standalone transactions 155–156
Standstill agreement 76, 90–91
Staples Inc. 352–353
Start-up companies 168
State and local tax 336–337
Statements of Financial Accounting Standards (SFAS) 339–340, 342
State regulations 
antitakeover laws 56–57
antitrust and securities laws 57
Statutory consolidation 13–14, 315
Statutory merger 13–14, 312, 315
Step-transaction doctrine 326
St. Jude’s Medical Inc. 378b, 380f
Stock-based pay plans 75
Stock-for-assets deals 312
Stock-for-assets reorganization 326, 328–329, 329f
Stock-for-assets transaction 312
Stock-for-stock deals 312
Stock-for-stock purchase 312
Stock-for-stock reorganization 326, 328, 329f
Stock lockup 81
Stock options 399, 401
Stock purchase 314
acquirer transaction summary worksheet 383, 384t
buyer’s perspective 314
constructing historical financials, and determining value drivers 
building historical financial statements 389
collecting and analyzing historical data 388
normalizing historical data for forecasting purposes 388
pro forma financial statements 387–388
definition 311
estimating value of Newco 389–395
estimating synergy and investment required to 391
projecting Newco financials 391–394
selecting discount rate and terminal period assumptions to value Newco 395
offer price and posttransaction capital structure, determining appropriateness of 
comparing offer price with estimated maximum offer price and comparable deals 396–397
comparing projected credit ratios with industry average ratios 397–398
Newco’s EPS, determining impact of deal on 398–401
Newco to meet/exceed required returns 401
projecting acquirer and targeting financials and estimating stand-alone values 389
seller’s perspective 314
Stocks, Bonds, Bills & Inflation 275
Stock subscription agreement 358
Strategic alliances 17, 417, 436–437
Strategic business units (SBUs) 161
Strategic buyers 155
Strategic controls 106, 116
Strategic industries 503
Strategic plan 427
Strategic realignment 6t, 9–10
Structural remedy 48
Structured data 147
Subchapter S (S-type) corporation 422, 423t, 424
Subordinated debentures 356
Subsidiary carve-out 454
Subsidiary merger 13–14, 315, 375–376
Successor liability 312
SunEdison 472
Supermajority rules 88
Supervoting shares 89
Surface Transportation Board (STB) 59
Surviving corporation 312
Survivor Inc. 474–475, 474b
Sustainable growth value 192
SWFs.  See Sovereign wealth funds (SWFs)
SWOT analysis 
definition 106
for Facebook 109, 109t
Syndicated loans 357
Synergy 5–8, 421, 497
cost savings 391, 404–405
definition 389–391
operating/asset-related synergies 405–406
revenue-related synergy 404

T

Tag-along provision 433
Takeover 
defenses  See Alternative takeover defenses
friendly 14–15
hostile 15–16, 76–77
strategies 347
alternative 14–16
options 310–311
warrants 311
tactics  See Alternative takeover tactics
Tangible book value (TBV) 215–216, 216b
Target assets (TA) 401
Target capital structure 458–459
Targeted customers, and potential for price discrimination 49
Targeted stock.  See Tracking stock
Target firm planning 
period assumptions 243, 244t
period balance sheet 243, 245t
period cash flow statement 243, 246t
period income statement 243, 244t
Target firm valuation 243, 247t
Target’s float 80
Target shareholders 78 See also Shareholders
appraisal rights 79
Target valuation model 243, 247t
Taxable deal 325t
alternative tax structures 323
international taxes 337
MLPs, REITS, Yield Cos 338–339
state and local taxes 336–337
takeover strategies 347
tax reform and Jobs Act  See Tax Cuts and Jobs Act of 2017
tax strategies 347
Taxable mergers 324
Taxable transactions 324–326
Section 338 elections 326
target assets, cash purchase of 324
target stock, cash purchase of 324
taxable mergers 324
Tax attributes 329
Tax Cuts and Jobs Act of 2017 239, 332t, 433–434, 434t, 507
AMT 333
carried interest 334
corporate tax rates 331
deductibility of interest expense 333
dividends received deduction 333
foreign earnings 334–335
investments in capital 332
1031 like-kind exchanges 335–336
NOLs 334
pass-through income 331
repatriation 335
tax cut expectations and firm value 336
tax inversions 338
Taxes 10–11, 297
business alliances 433–434
considerations 444
divestitures 450
effect of 298
equity carve-outs 454
liabilities, minimizing 498
minimization 267
spin-offs 452
strategies 502
tracking stock 458
worldwide/global tax system 506–507
Tax-free cash-rich split-off 456
Tax-free reorganizations 326–329, 502
Tax-free transactions 
alternative tax-free reorganizations 326–329
1031 like-kind exchanges, arising from 329–331
qualification 326
target tax attributes treatment 329
Tax inversions 337–338
Tax matters agreement 460
Tax rate 276
Tax Reform Act of 1986 60
Tax shields 372, 373t
TBV  See Tangible book value (TBV)
Technical insolvency 473
Technological innovation 9–10
Technology objectives 111
Telecommunications Act (1996) 59
Tender offer 15, 41, 315–316
hostile tender offer 
implementation 79
multitiered offers 79
toehold investments 78
proration clause 302
solicitation 42
statement 42
Williams Act 41
Terminal growth value 192
Terminal value 248–249
Termination 
business alliances 433
rights 143
Term loans 354
Term sheet 133
TerraForm Global Inc. 472–473
Territorial tax system 334–335, 506–507
Thermo Fisher Scientific Inc. 409b
Thrift institutions 58
Time Warner Cable (TWC) 52
Toehold position 78
Toehold strategies 78
Toggle buttons 238–239
Top-down approach 243
Topping fee 480
Total beta 274
Total compensation 163
Total purchase price (PVTPP) 139–140
Toxic Substances Control Act of 1978 60
Tracking stock 
characteristics 460–461, 460t
definition 457
motives for 457
postannouncement financial returns 465–466
preannouncement abnormal returns 462t, 465
problems with 458
tax and accounting considerations 458
Trade magazines 504
Trade-off theory 359
Transaction expenses (TE) 401
Transfer taxes 314
Transformational deals 155
Transition agreement 460
Travel and entertainment (T&E) expenses 269
Treasury inflation-protected securities (TIPS) 510
Treasury stock method 400
Treaty on the Functioning of the European Union (TFEU) 61
Triangular mergers 316, 324, 347
Trigger points 104
Trustee 475, 478
Turnaround/defensive strategy 112
Two-factor models 486
Two-step merger 315–316
Two-tier board 68
Two-tiered offer 79
Typical business unit 116b

U

Uber Technologies Inc. (Uber) 283, 283b
Underperforming businesses 443, 462
Unemployment Compensation Act of 1992 60
Unfunded pension liabilities 107
cash impact 199
United Nations Commission on International Trade Law (UNCITRAL) 477
United Technologies (UT) 204b
Unlevered β 185
Unsecured lenders 355–356
Unstructured data 147
US bankruptcy laws 476–477
US Constitution authorizes Congress 477
US corporate tax rate 337
US Court of Appeals 40
US Federal Drug Administration 307
US Foreign Corrupt Practices Act 37–38t, 58
US healthcare industry 322–323
US Securities and Exchange Commission 345–346
US tax courts 273
US tax liabilities 498
US tax rate 507
US Treasury 503
bond rate 512
UT  See United Technologies (UT)

V

Valeant Pharmaceutical International Inc. 236
Valuable corporate asset 74
Valuation cash flows 188
claims holders 188
definition 190b
equity investors 189
tax rate 188–189
Valuation methodology 178, 200, 228
different approaches 225
professionals 228
Valuation process, key steps 239–249
determinants of revenue growth and profit margins 240–243, 241–242t, 242f
financial statements analyzation 239–243
historical data normalization 240
zero interest rate environment 254
Value chain, credit/debit card processing industry 122f
Value drivers 239, 385
Value-enhancing investments 73–74, 95
Valuing private firms 268
applying valuation methodologies 272–273
asset-oriented approach 273
income/discounted cash flow, approach 272–273
relative value/market-based approach 273
replacement cost approach 273
value, definition of 272
challenges 
externally generated information, lack of 267
firm-specific problems 267
internal controls and reporting systems, lack of 267
reported income manipulation, forms 267–268
control premiums, liquidity, and minority discounts 278–283
discount rates development 273–276
financial statements adjustment 268–271
Vantiv 122b
Variable costs 5–6
Variable-growth (supernormal/nonconstant) valuation model 192–193, 194b
Venture capital funds 20, 360–364
Venture capitalist 20
Verizon discounts 233–234
Vertical mergers 49
Virtual data rooms (VDRs) 139, 447–448
VMware 286–287
Volcker rule 54, 54–55t
Voluntary bankruptcy 475
Voluntary liquidations 483
Voluntary out-of-court liquidation 478–479
Voluntary settlements 
continued operation 474–475
liquidation 475
Vornado Realty Trust 42

W

WACC  See Weighted average cost of capital (WACC)
Walgreens Boots Alliance 62b
Walmart Stores Inc. 172b, 438–439, 438b
Warrants 358, 399–401, 400t, 411
definition 304
takeover strategies 311
Wealth transfer 464
Weighted average cost of capital (WACC) 183, 239, 248, 359, 401, 513–514, 513b
Weighted average valuation method 218, 219b, 227t
Westlake Chemical 296–297
WhatsApp 10
acquisition of 109
Whetlab 104
White knight 91
White squires 91
WHO  See World Health Organization (WHO)
Whole Foods Market Inc. 381–382
Williams Act 68t, 79
Sections 13(D) and 13(G), ownership disclosure requirements 41–42
Sections 14(D), rules governing tender offer process 
best price rule, 14(D)-10 42
obligations of acquirer 42
obligations of target firm 42
shareholder rights, 14(D)-4 to 14(D)-7 42
tender offers, regulation of 41
Winner’s curse 10
Win-win situation 422
Worker Adjustment and Retraining Notification Act (WARN) 60
Working capital guarantee balance-sheet adjustments 304t
Workouts 474
World Bank’s Multilateral Investment Guarantee Agency 504
World Health Organization (WHO) 231
Worldpay 122b
Worldwide/global tax system 334–335, 506–507
Written contract 422, 427, 430, 437

X

Xerox Corp. 455, 494–495

Y

Yield Cos 339
Yield to maturity (YTM) 182, 183t

Z

Zero-growth valuation model 191, 191b
Zombie companies 360
Z scores 486
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