Corporate Finance

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Corporate Finance
by Prof. Dr. Dr. Joachim Häcker

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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M&A, Initial Public Offering and Going Private
Chapter 1. 2. Initial thoughts on M&A, ECM and Going Private M&A sales process
1. Initial phase 2. Contacting interested parties 3. Financial aspects of M&A 4. Legal aspects in M&A sales process 5. Lessons learned 6. Case study: Deutsche Telekom Cable


The importance of Equity Capital Markets as an alternative to M&A
1. Team Structure 2. Key offering consideration 3. Offering process 4. Lessons learned 5. Case study: Deutsche Post IPO


Going Private as an alternative to being quoted
1. Introduction 2. Market overview and market volume in Europe 3. Reasons for Going Private 4. Transaction structure 5. Lessons learned 6. Case study: Honsel

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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1. Initial thoughts on M&A, ECM, and going private 1. Initial thoughts on M&A, ECM, and going private

1. Initial thoughts on M&A, ECM, and going private
1. Reasons for choosing the relevant process from a seller’s perspective Reasons for M&A Competitor’s pressure is increasing. Sale of company seems to be inevitable because company is facing serious problems like: No access to new technologies and developments Strong market entry barriers. Geographical presence could not be enhanced Badly positioned on the supply and demand side Critical mass in core business could not be realised No efficient utilisation of distribution capabilities New strategic business units for future growth could not be developed Window of opportunity: Possibility to sell the business at an attractive price Further diversification of product portfolio

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Reasons for going public

Cash-in of money bound within an investment Sale of the company Using equity as an acquisition currency Introduction of stock option and incentive programmes for employees and top-management Enhancement of fungibility of shares Enhancement of public awareness Incentives for high potentials. The reputation of being a CEO of a quoted company is much better compared to a “Geschäftsführer of a GmbH” Reducing principal / agent discrepancy. Better monitoring of management due to public awareness Solving the issue “Nachfolgeregelung” Risk diversification. An entrepreneur can take out some of his capital and invest it outside the firm

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Capital markets issues:

Reasons for going private

Size of companies: Small companies get not the required analyst coverage and investor interest. Low trading volumes make buying and selling of large share blocks difficult. Publishing costs are for small companies over-proportionally high Sector Rotation: Market climate is subject to sector rotation. Low coverage companies tend to be undervalued, even if it is a strong growth company in a unknown sector. Investors and brokers tend to spend not enough time on understanding complex business models and niche products. Valuation trap: Undervalued companies do not want to increase capital. They lack therefore one financing possibility. Investment opportunities are limited for these companies. Share price will drop further Strategy: Access to capital market: Limited access to capital markets for strategic ambitions. Private equity investors can provide much more capital than capital markets under certain circumstances. Additional debt capacity Restructuring: The process of restructuring is much easier if free from pressure of regular reporting and pressure from shareholders. Long-term strategic planning is simplified since return calculations play a minor role Platform strategy: Use of Going Private company as a platform for a merger with further portfolio companies
Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2. Opportunities based upon life cycle

Cash Flow

•Seed Financing •Start-Up Financing •1st Stage Financing

IPO (eventually trade sale or acquisition)

Acquisition Merger Trade Sale

Going private





Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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3. Volume European M&A volume, 1997-2002 ($ billion) European IPO volume, 1997-2002 (€ billion)

1400 1222 1200 1021 1000

120 100 100


800 609 600 400 200 0 1997 1998 1999 2000 2001 2002 470 529 481
40 32 31.6 60





0 1997 1998 1999 2000 2001 2002

European M&A volume

European IPO volume

M&A volume in 2002 of around $ 480 bn

IPO volume in 2002 of around € 12 bn

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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European M&A

European IPO

European M&A volume fell 9% to $481 billion in 2002 after a 48% decline to $529 billion in 2001 The decline was concentrated in the category of $10 billion-plus deals, in which volume fell 47% from 2001 to $47 billion and the number of deals fell from six to three The volume of $1-10 billion deals increased 3% to $220 billion from 92 deals, against 87 in 2001, and the volume of sub-$1 billion deals fell by 6% to $214 billion

The top 10 IPOs in 2002 accounted for 75% of total offering value compared to 66% in 2001. The London and Euronext exchanges together accounted for the 3 largest IPOs in each year and increased their combined share of the top ten 5 in 2001 to 6 in 2002. The quarterly spread of IPOs in 2002 is consistent with that in 2001. The second quarter saw the greatest level of activity, and the fourth quarter the last. Overall, the trend is towards a lower average offering value. This contributed to the relative success of smaller companies markets, particularly AIM in London.

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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European Going Private volume, 1997-2002 (€ billion)
16.0 35

Going private transaction started in the mid 80s in the US. In Europe, like in all private equity segments, the English market was precursor In the UK going private activities started with the buy-out of the foundry “William Cook” by Electra Fleming for GBP 80m. Since 1998, the number and the volume of going private transactions increased significantly in the UK as well as on the continent In 2000 32 transactions have been carried out valuing around €15bn.

14.0 Kumuliertes Transaktionsvolumen (€ Mrd.)


12.0 25 10.0 20 8.0 15 6.0 10 4.0 5 Anzahl Transaktionen


0.0 1997 UK 1998 1999 Germ any 2000 Other 2001 2002* No. Trans actions


Going Private Volume in 2002 of around € 11 bn

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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4. Capital markets driving M&A, IPO and going private activities Where is liquidity?
The total value of equity trading in European markets showed a decrease between 2001 and 2002 of 17% from €11,278bn to €9,394bn with no major exchange showing a year-on-year increase London and Euronext continued to dominate trading in Europe – together accounting for 67% of all trading in 2002

Structural changes

Stock exchanges and market segments are currently undergoing structural changes, alliances and M&A in an attempt to offer low cost trading and settlement across all securities. The drivers of this change are increasing competition. Recent major developments in Europe include: Euronext – a merger between Paris Bourse, Amsterdam Stock Exchange, the Brussels Stock Exchange, and the Lisbon Stock Exchange Norex – an alliance between the Copenhagen Stock Exchange, the Iceland Stock Exchange and the Oslo Stock Exchange Newex – a new exchange operated jointly by Deutsche Börse and Wiener Börse focusing on companies from Central and Eastern Europe

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Where is the value?

The relative proportions of the total market cap of Europe’s major stock exchanges remained broadly consistent in 2002 compared to 2001, despite a 23% fall in the total market cap. The exception to this general comment is the Deutsche Börse, which saw its total market cap drop by 45%

Comparison with US

Nasdaq experienced the greates reduction in trading in 2002 compared to 2001, while NYSE was relatively stable – reflecting the nature of the equities traded on each exchange. The level of liquidity on the NYSE is broadly equivalent to the total liquidity on the European capital markets

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2. M&A sales process 2. M&A sales process

2. Sales process 1. Initial phase
1. Pitch 2. Choice of process 3. Advisers 4. Mandate letter 5. Confidentiality agreement


Contacting interested parties
1. Documentation 2. Indicative offer


Financial aspects of M&A
1. Due Diligence 2. Valuation 3. Structuring 4. Financing


Legal aspects in M&A sales process
1. Negotiations 2. Binding offer 3. Closing

5. 6.

Lessons learned Case study: Deutsche Telekom Cable

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.1.1 Pitch
Overview Content of a pitch book Assessment of current situation at seller Strategic, financial and competitive position SWOT 'Gap' analysis Assessment of options Identification of a set of potential actions Introduction to potential target(s) Deal structure Financial attractiveness: Accretion / Dilution Financing Advise/Recommendation Framework to analyse benefits/shortfalls of alternative options Deduction of recommendation Next steps

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.1.2. Choice of process
Auction versus discrete approach (Overview)
Discrete approach One-to-one private discussions with a series of interested parties Simultaneous bilateral negotiations Private discussions conducted with one or more interested purchasers Controlled competitive auction Carefully controlled programme aimed at creating a competitive bidding environment Full public auction Public announcement that the company is for sale followed by controlled competitive auction process

One bi dder

Public annou nceme nt

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Discrete approach Advantages May be completed in limited time frame Easily terminable Maintains element of exclusive sale Minimised impact on employees Most confidential and controllable process Disadvantages Limited ability to compare different proposals Risk of ending up with a relatively low value Limited negotiating leverage due to lack of competition

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Simultaneous bilateral negotiations Advantages A certain level of competition is guaranteed Confidentiality still is maintained Easily terminable Minimised impact on employees Disadvantages Value will not be maximised because seller will accept first adequate offer

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Controlled competitive auction Advantages Confidentiality still maintained Seller has most control over terms of transaction Increasing value Enhances perception of fairness Disadvantages Readiness for sale is in the market Potential for leakage Management can not effectively be shielded from the process

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Full public auction Advantages Value maximisation Most competitive environment is being created Enhances perception of fairness Limits uncertainty for personnel Disadvantages Not discrete Potential damage to business due to wide public awareness about sale If sale process fails, decrease of enterprise value Less flexibility to terminate the process

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.1.3 Advisers
Advisers in an M&A sales process Seller
Key decisions (selection of potential buyers and preferred bidder) Supervision of process Management of employee issues Participation in preparation of selling documentation Public communications Involvement in negotiations

Accountants Investment bank
Review of documentation and verification of financials in information memorandum Development and implementation of tax efficient disposal structure Preparation of accounts (IAS, US-GAAP) Support due diligence and preparation of due diligence report

Project management Valuation Preparation of Information Memorandum Preparation of transmittal letters and other process documentation Preparation of management presentation

Preparation of legal documentation Legal review and implementation of sale structure and related issues Preparation and management of data room Supporting additional due diligence of purchasers Consideration of antitrust position of potential purchasers

Potential buyer
Provision of information on the business Confirmation of views on valuation and potential purchasers Management presentations

Management of and communication with potential purchasers Primary responsibility for negotiations

Examples of other advisers
Actuarial – review/report on actuarial assumptions Building/engineering – review/report on terms of building tenure and survey Environmental – review/report as required by buyers

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.1.4 Mandate letter
Core elements of a Mandate letter in a sales process 1
Subject matter and objective of the agreement

The Client intends to fully or partially divest “Company A” (hereinafter referred to as the “Target Company”). The Target Company is also comprised of its direct or indirect subsidiaries and participations. Definition of transaction Client hereby appoints “the Investment Bank” to advise him in respect of negotiations relating to the Transaction 2
Principal Obligations and Services of an investment bank

The investment bank shall – in co-ordination with Client – render the following advisory services: Familiarise itself with the Target Company and its business and financial situation Prepare a list of potential buyers, open up negotiations with potential buyers in close collaboration with Client and advise and support Client within the scope of conducting such negotiations Advise Client on the transaction structure Advise and support Client within the scope of establishing the main financial terms of the Transaction. Assist Client in the preparation and execution of presentations relating to the Transaction 3

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Core elements of a Mandate letter 4
Ancillary Obligations of Client

During the term of this Agreement, Client shall exclusively retain the Investment bank to perform the services under this Agreement Upon request of the Investment bank, Client shall furnish to the Investment bank all information and documents and make all disclosures, which could support or be useful Client shall only enter into talks with the buyer, his direct or indirect stockholders or shareholders in connection with the Transaction upon prior co-ordination with the Investment bank Client agrees that the Investment bank may use and utilize publicly available information to perform this Advisory Agreement without making its own review of the contents for correctness and completeness 5

The Investment bank shall only be liable for damage caused by willful default or gross negligence



The Investment bank undertakes to keep confidential all information received from Client in connection with this Agreement. This shall not apply for information available to the public The Investment bank shall only publish or make confidential information avail-able to third parties upon Client’s consent unless a broader disclosure is required under mandatory provisions of law or the disclosure has been ordered by a government agency or a court of law
Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Core elements of a Mandate letter 7

This Agreement may be terminated by either party at any time The notice of termination shall require written form. Should the notice of termination be based on good cause, this fact and the ground for good cause must be disclosed in the notice of termination 8
Applicable Law and Dispute Settlement

This Agreement shall be governed by the laws of the Federal Republic of Germany The place of arbitration is Frankfurt am Main. The language of the arbitral proceedings is English 9

This Agreement contains all of the agreements made between Client and the Investment bank with respect to this matter. No other written or oral side agreements exist Should individual clauses of this Agreement be or become void, invalid or un-enforceable in whole or in part, the validity of the other clauses shall remain unaffected. The void, invalid or unenforceable clause shall be replaced by a clause which comes closest in commercial terms to the void, invalid or unenforceable clause

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.1.5 Confidentiality agreement
Confidentially agreement Purpose Purpose of the confidentiality agreement is to allow potentially interested parties access to some non-public, confidential, or proprietary in nature information The information is required to specify interest in the company further Generally speaking, the company wants to give as little information as possible away, the interested party wants to have access to as much information as possible Confidential information is not allowed to be passed on to other parties except in the case they join the confidentiality agreement Direct contact with target company staff is not permitted All information obtained by the target company must be returned upon request by target company, latest after termination of interest Confidentiality agreement guarantees no transaction Interested party has to refrain from hiring target company staff in a period after termination of confidentiality (1-2 years)
Corporate Finance by Prof. Dr. Dr. Joachim Häcker

Core elements

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2.2.1. Documentation
Information memorandum Purpose
Key issues to consider Precise definition/description of business to be sold Sufficient disclosure to allow informed decision Confidentiality to preserve the value of the operation What information will be distributed now, what later

The information memorandum is the key sales document and can be used as a reference document throughout the process The main purpose of the memorandum is to answer the critical questions any interested buyer would seek to know and it will form the basis on which buyers will be requested to submit indicative offers The level of disclosure in the memorandum should be balanced, such that the serious interested parties can make preliminary offers on an informed basis (including a preliminary valuation), while no sensitive information is given away that would harm the value of the assets to be sold Given preparatory work already carried out, the information memorandum can be written in a period of around three weeks in co-operation with the management

Content Management Summary Company profile SWOT-analysis Market and competitors Products und distribution Personnel and organisation Financials

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.2.2 Indicative offer
Core elements of an LOI Issues
The terms “letter of intent”, “memorandum of understanding” and “indicative offer” and “non-binding offer” are all used vive versa in practice Brief outline of the structure of the transaction, which may entail the payment of cash or stock for certain assets and the assumption of certain liabilities of the target company Certain conditions such as an agreement that selected personnel of the target company will not compete with the combined companies for some period of time if they should leave The purchase price may be expressed as a specific € figure, as a range, or as a multiple of some measure of value such as operating earnings or cash flow Specification of types of data to be exchanged Duration of the due diligence The buyer usually demands exclusivity for the further consummation for the process A well written LOI contains language that limits the extent to which the agreement binds the two parties. Price or other provisions are generally subject to closing conditions, such as the buyer having full access to all of the seller’s books and records completion of the due diligence the ability of the buyer to obtain financing and approvals including both boards of directors, stockholders, and regulatory bodies
Corporate Finance by Prof. Dr. Dr. Joachim Häcker

Language of the LOI

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2.3.1 Due Diligence
Overview Definition
Due Diligence is the process of taking reasonable care for possible risks in an acquisition Deliberate, systematic and professional analysis of the strengths and weaknesses of running acquisition negotiations It is intended to overcome information asymmetries before signing a contract Collection of data and information on the target company Checklist with detailed questions and requirements for documents to be passed on to management of target company and shareholders Collection of internal company information, which can be accessed by the potential acquirer Additionally: Management interviews Result: Preparation of a detailed Due Diligence report that can be used as a basis of a refined valuation and which is used to phrase the guarantee clauses in the sale and purchase agreement Due Diligence can be divided into four topics: Legal, Financial, Tax and Strategic Due Diligence Important: In a hostile takeover bid, there is no possibility for a Due Diligence process!



Topics of Due Diligence

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Main topics Legal Due Diligence
Check of legal fundamentals and legal risks within the target company as well as internal and external legal structures Examples Shareholder agreement Relevant boards and bodies Commercial register Required administrative decisions Legal risks from current or possible law suits as well as from existing contracts and agreements Binding of key staff Basic agreements for revolving contracts

Financial Due Diligence

Object of investigation: Annual reports from last years and current quarterly reports as well as corporate planning Additionally: Audit reports, strategic and financial planning, protocols of shareholders meetings Aim: Analysis of balance sheet politics in order to check consistency of applied methods

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Main topics (cont’d) Tax Due Diligence Object of investigation: Tax declarations and tax statements, audit reports by fiscal authorities, documents for fiscal planning Approach: Comparable to an advanced fiscal auditing Examination of possibility for using potential losses carried forward

Strategic Due Diligence

Business plan issues: Object of investigation: Forecast P&L and balance sheets as well as liquidity and cash-flow forecasts. Market appraisal, competition, products and expected costs Critical check of essential forecast assumptions „Stand-Alone“-analysis in comparison to strategic aims of acquirer

Management presentation

Seller’s management carries out a sale side oriented management presentation. Potential buyer is given the opportunity to discuss due diligence issues with management.

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.3.2 Valuation

Will be lectured separately

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.3.3 Structuring
Horizontal vs. Vertical Integration

Automotive supplier

Vertical Merger/Acquisition

Backwards integration



Forward integration

Automobile distribution organisation

Horizontal Merger/Acquisition
Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Newco AB



Company A

Company B

1. Companies A + B are brought in an merged into new company (Newco AB) 2. Company A is merged into Company B or vice versa

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Holding Company

50 % Company A

50 % Company B

Companies A & B are subsidiaries of Holding Company and co-exist as legally separate entities

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Acquisition/Merger via share exchange

Company AB after merger

Net income No. of shares EPS Share price P/E ratio MCAP

Company AB 400,000 150,000 2.67 40.00 15 6,000,000


Company A
Net income No. of shares EPS Share price P/E ratio MCAP Company A 200,000 100,000 2.00 40.00 20 4,000,000

Company B

Company B 200,000 100,000 2.00 20.00 10 2,000,000

1. Company A acquirers Company B via share exchange (exchange ratio of 1 to 2 assuming no takeover premium) 2. Company B is merged into Company A
Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.3.4 Financing
Developing the financing plan Introduction Financing is an important issue for the buyer, who has to fund the acquisition Sellers might also want to understand the financing for two reasons: Checking the seriousness of the potential buyer Establishing a comparison with other bidders, who have different sources of financing The final activity of the phase “financial framework” is to develop balance sheet, income and cash-flow statements for the combined entities in accordance with HGB, US-GAAP or IAS Unlike the financial projections of cash flow made to value the target company, these statements should include the expected cost of financing the transaction This activity is a key input into the determination of the purchasing price, as it places a practical limitation on the amount of the purchase price the buyer can offer the seller Based on priority and time frame, especially two types of financing are emphasised: Bridge or interim financing Mezzanine financing


Types of financing

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Is there an optimal capital structure?

Let’s ask the traditional thesis: Interrelation between cost of capital and level of debt

k i


k i RoE: Return on Equity i: Cost of debt k: WACC

Optimal level of debt

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Corporate Finance by Prof. Dr. Dr. Joachim Häcker

Is there a optimal capital structure? Let’s ask business practice

Equity ratio of DAX 100 companies
Analysis of 77 companies of DAX100
14 12 10 8 6 6 4 2 2 0 bis bis bis bis bis bis bis bis bis bis bis bis bis 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 1 6 5 3 3 5 30 20 10 0 13 11 70 9 60 50 40 13
Kumulative Anzahl Unternehmen (Rechte Achse) Cumulative number of companies 90 Anzahl Unternehmen (Linke Achse) Number of companies


Excluded were financial services provider (incl. insurances and asset management companies as well real estate companies German equity ratio for DAX 100 companies stands at 31% European equity ratio (measured via EuroStoxx) stands at 38% Practice supports a conclusion, which lies in between Traditional thesis and Modigliani Miller thesis: In practice, one can see a (relatively large) band of optimal equity ratio

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.4.1 Negotiations
Major issues Negotiation tactics Separate between people and problems Focus on interests rather than positions No winners or losers Generate options in mutual interest Avoid “positional” conduct of negotiations Establish objective criteria Price and Corporate Governance usually as final issue Common negotiation threats Lack of authority Psychological pressure Personal attacks Good guy / bad guy Untruth Refusal to negotiate Delays Uncompromising partner Time limits “Last word”

Personal credibility of negotiators is key

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.4.2 Binding offer
Reasons for binding offer A binding offer is typically submitted in open auction processes A binding offer results into legal liabilities opposed to an indicative offer

Key elements

A binding offer contains all elements from the indicative offer as well as: Guarantees to be issued Non-compete clause Time frame for signing a sale and purchase agreement

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.4.3 Closing
Elements of closing phase The closing phase consists of obtaining Customer and vendor contracts Regulatory approval Shareholder approval In the closing phase previously minor issues seem to resurface on a more complex scale. Sometimes this happens because the parties did not realise the significance of an item until the last minute Sometimes, however, this happens because one party intentionally takes a hard line on an issue as the closing date approaches in the hope of gaining a negotiating advantage. Wrong strategy: Resulting confrontation and dissolution of trust (which was built up during the process) may ultimately force one party to walk away from the transaction

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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Customer and vendor contracts

In a purchase of assets, many customer and vendor contracts cannot be assigned to the buyer without receiving written approval from the other parties Approval from the licensor must be given and they can also be a major barrier to a timely closing if not properly planned in advance Eg. at the end of the acquisition process of an IT company a major software vendor might demand a substantial increase in royalty payments before they would transfer the license to the buyer (if the vendor is aware that the software is critical for the ongoing operation of the business)

Antitrust laws Shareholder approval

Ensure that the transaction is in full compliance with antitrust laws Many transactions require approval by the shareholders of both the acquiring and target companies before ownership can be legally transferred

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.5 Lessons learned
Reasons for M&A Access to new technologies and developments Overcome market entry barriers Achieve critical mass in core business realised within manageable timeframe Develop new strategic business units for future growth Enhance geographical presence and rapid penetration of new markets Efficient utilisation of distribution capabilities Enhance market position on the supply side Elimination of future competition Reduce “costs of goods sold” with higher capacity utilisation Window of opportunity: Possibility to acquire a business at an attractive price from a seller disposing a non-core asset Enhance market position on the demand side Further diversification of product portfolio

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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2.5 Lessons learned (cont’d)
Milestones of the M&A process The milestones of an M&A process are Initial phase (pitch, mandate letter, choice of process, confidentiality agreement and the selection of advisers) Contacting (documentation, indicative offer) Financial aspects (Due Diligence, valuation, structuring, financing) Legal aspects (negotiations, binding offer, and closing)

Optimal capital structure?

Is there an optimal capital structure? Theory does not offer a clear answer to the question of capital structure. Practice supports an optimal capital structure of around 30% equity ratio in Germany (holds for listed companies)

Corporate Finance by Prof. Dr. Dr. Joachim Häcker

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