GOING PRIVATE TRANSACTIONS

LBO
Leverage Buyout
The acquiring
party is a private
equity firm

MBO ESOP
Management
Buyout
The acquiring
party are the
current managers
of the corporation

Employee Stock
Ownership Plan
The acquiring
party are the
employees of the
corporation itself

REVERSE LBO

A formerly public
company that has
previously gone
private throught
LBO and then
goes public again

DUAL-CLASS
LEVERAGE RECAPITALIZATI
RECAPITALIZATION

Issuance of a new
class common
shares with the
intent of
concentrating
control of voting
rights in one group
of investors.

When a company
gretly increases
the portion of
debt in its capital
structure, often
retiring equity in
the process.

Defensive measures that

many companies rely on to
ward off surprise or
unwanted takeover
attempts.

TAKE OVER DEFENSES

Assets and/or resources of

subsidiary or division are
conveyed to another
organization.

DIVESTITURES

Asset Sale
Assets of company are sole to
another oraganization, usually for
cash.

Spin Off
A parent company creates a new
company with its own shares to
form a division or subsidiary.

Split Off
A parent company creates a new,
independent company with its own
shares.

Split Up
The division and sale of all of a
companys subsidiaries, so that it
ceases to exist.

Bust Up
The takeover of a company that is
subsequently split up.

ACCOUNTING TREATMENT OF
MERGERS AND ACQUISITION

morethan
than
If the acquiring firm paid less
the fair value of the targets net
asset, it recognizes the difference
as an intangible asset called

GAIN ON
GOODWILL
ACQUISITION

REGULATION OF MERGERS AND

ACQUISITIONS

HI > 2500
Highly concentrated
HI = 1500 to 2500
Moderately concentrated
HI < 1500
Not concentrated

PRE MERGER
CONCENTRATION
FIR
M1 + 2

MARKET SHARE
3
50
(%)

0
2
0
1
0
1
0
1
0
1

7 +8
8

0
10
5
5

2
3
4
5

SUM
CONCENTRATION

MARKET SHARE
900
SQUARED2500
400
100
100
100
100
100
25
25
1750
1800
2950
HIGH
MODERATE