Waiting period under Hart-Scott-Rodino for stock deals
Waiting period under Hart-Scott-Rodino for all cash deals
Document filed when purchaser launches a tender offer
Purchaser files a Schedule TO to launch a tender offer
Minimum length of tender offer
Tender offer must remain open for at least 20 business days.
Document used by TargetCo management to respond to a tender offer
TargetCo management responds to a tender offer on a Schedule 14D-9
Deadline for TargetCo management to respond to a tender offer
TargetCo management must respond to a tender offer within 10 business days of a Schedule TO filing
Change to terms of tender offer
Any change to the terms of a tender must remain outstanding for at least 10 business days
Rule permitting share buybacks
Share buybacks are permitted under Rule 10b-18
Safe Harbor for small issuers under Rule 10b-18
Safe harbor for share repurchases does not include the first trade of the day or the last 30 minutes of trading
Safe Harbor for actively traded securities under Rule 10b-18
Safe harbor for share repurchases for actively traded securities does not include the first trade of the day or the last 10 minutes of trading
Volume limitation for share purchases
Daily volume limitation for share repurchases is 25% of the stock's daily trading volume
Acceptable purchase price for share repurchases
Issuer can bid on their own securities at the greater of highest current bid or last sale price.
Restricted Period for M&A Deals
Under Reg M, the restricted period begins the day proxy materials are sent to shareholders
Type of buyer who will generally pay higher for a Target Company
Strategic buyers will generally pay more than financial sponsors due to synergies
Two key features of attractive LBO candidates
Buyers look for strong cash flow and operational improvements in attractive LBO candidates
Attractive feature to acquirer in an asset sale
In an asset sale, the buyer generally benefits from a stepped up cost basis
What is a fixed ratio transaction?
In a fixed ratio stock-for-stock transaction, the number of AcquirerCo shares received for each TargetCo share is fixed. Therefore, the transaction value changes.
What is a floating ratio transaction?
In a floating ratio stock-for-stock transaction, the value of the transaction is fixed, so the number of shares exchanged will fluctuate.
Benefits of broad auction
Broad auction offers best possibility of achieving maximum value by marketing to the largest number of potential buyers
Benefits of a targeted auction
Targeted auction maintains confidentiality, resulting in less business disruption
Describe a teaser
1-2 page company overview articulating the investment merits of the target; usually the first marketing document presented to prospective buyers
Document signed by a firm and an adviser to pursue an underwriting or strategic alternative (i.e. acquisition)
What is a non-solicitation clause?
Non-solicitation is a clause in a Confidentiality Agreement which prohibits the Acquirer from hiring away the Target's key personnel.
What is a standstill agreement?
A standstill agreement is a provision in a Confidentiality Agreement which prohibits the Acquirer from making a hostile bid for the Target for a number of years after the initial engagement.
What is a club deal?
A club deal (clubbing) is a joint bid by multiple acquirers. A target might seek to prohibit club deals in a Confidentiality Agreement.
Describe a Confidential Information Memorandum (CIM)
A CIM is the main marketing document used by the Target including information about the sector, company, competition and financials.
Pro Forma Net Income for Accretion / (Dilution)
Pro Forma Net Income = AcquirerCo Net Income + TargetCo Net Income + After-Tax Synergies - After-Tax Interest Expense
Pro Forma Outstanding Shares for Accretion / (Dilution)
Pro Forma Shares = AcquirerCo Diluted Shares + New Shares Issued
New Shares Issued in an acquisition
New Shares = (Purchase Price x % stock consideration) / AcquirerCo Stock Price
Calculation of Exchange Ratio
Exchange Ratio = (Purchase Price per Share - Cash per Share) / AcquirerCo Stock Price