Presentation will include:
M&A Process and Key Terms
Ethics in M&A
Lead vs. Supporting Roles in M&A
Sundays, 20:15-21:30, Room 253
Lecturer: Yair Friedman
Internet Site: www.friedman.org.il
Class attendance is not obligatory.
However, Work submission is mandatory…
If you do attend, please be ready.
Cell phones on Mute…
Lectures and Class Discussions
Individual Case Write-Ups
Sector Comparable Analysis
Historical Transaction Analysis
Deal Proposal Exercise
Bonus: Presentation of your choosing
Pick a Merger or Acquisition.
List reasons, prices, problems, etc.
Financials Overview (acquirer and target)
State your opinion
Differences between owning a firm and being
To provide a broad overview of the M&A
process, an understanding of the conceptual
framework and a review of empirical evidence.
To cover key aspects of the Acquisition
business process from corporate strategy, to
target evaluation, to deal negotiation, close,
Combining theory and know-how.
Range for “failure”: approximately 50%.
So, why acquire? Explanations include:
Markets are rational but managers are irrational
Markets and managers are irrational
Markets are irrational but managers are rational
Rational markets and managers
Companies end up doing business on
a larger scale, with increased economic
power, but the question is whether or
not they gained competitive advantage /
Make (grow organically) versus Buy.
Access to new technology, manufacturing
capacity or suppliers.
Access to management or technical talent.
Synergy (e.g. expenses / costs reduction).
Access to new product lines.
Quick access to new markets or industries.
Why do some M&As fail?
Home-work / planning
Strategy ≠ M&A
M&A is not a strategy.
Strategy has become a catchall term used to
mean whatever one wants it to mean.
Strategy is the means by which organizations
achieve their objectives.
The essence of strategy is making choices,
and mainly answering the following questions:
“Where to compete?” and “How to compete?”
A strategy (Hambrick & Fredrickson, 2001)
has 5 elements, providing answers to 5
Mergers have typically occurred in cyclical
patterns: periods of intense merger activity
have been followed by intervening periods of
Historians and M&A specialists have
identified five merger waves in US history.
First Merger Wave (1897-1907)
Followed the Depression of 1883.
Most mergers concentrated in a handful of
industries: petroleum, mining, metals, food and
Included many horizontal mergers, so
affected industries became concentrated.
Second Merger Wave (1916-29)
Began during World War I and continued
until the stock market crash of 1929.
Mergers faced increased governmental
scrutiny because of the first merger wave.
Mergers were characterized by oligopolies
rather than monopolies.
Third Merger Wave (1965-1969)
Coincided with a period of economic
prosperity in the US. The strong economy
gave many firms the resources necessary to
acquire other companies.
Characterized by as conglomerate mergers.
Horizontal mergers were subject to strict
Johnson Administration (1963-1969) favored
aggressive antitrust enforcement.
Fourth Merger Wave (1981-1989)
Coincided with the presidency of Ronald
Reagan, and the economic prosperity of the
mid- to late-1980s.
Although most mergers that occurred were
“friendly,” there were more hostile takeovers
than previously (“corporate raiders”).
Mergers were larger than those of
earlier periods. Mergers in the
billion-dollar range became common. Debt
was more widely used to finance mergers.
Fifth Merger Wave (1993-2000)
Followed the economic recession of 1990-
91, and coincided with the Clinton presidency.
Large mergers occurred at about the same
level as during the fourth merger wave; hostile
takeover activity diminished.
Mergers emphasized longer term business
strategies. Debt-financed mergers were less
common than during the fourth wave.
Selected M&As in 2008
Company Acquirer Industry Acquisition
Barr (US) Teva Pharmaceuticals $ 7.2B
Let It Wave (France) Zoran Video Solutions $27.6M
Zoomix Microsoft (US) Software $20-30M
SDM Bank (Russia) Hapoalim Bank Banking $111M
Destinator Intrinsyc (Canada) Wireless Software $16M
Revaho (Holland) Netafim Irrigation $60M
Photon Dynamics (US) Orbotech Inspection Systems $290M
Eutronsec (Italy) Aladdin Security Software €10M
Care Vision (Europe) Baviera (Spain) Ophthalmology €22M
Qumranet Red Hat (US) Software $115M
Tribe (US) Osem Food $57M
Pixer Technology Carl Zeiss (Germany) Optics Solutions $70M
Logos (Czech) Ness Technologies IT services $68M
Source: The marker and other news sites
M&A Process and Key Terms
Valuing issues (DCF, Multiples)
Negotiation / Bidding
Time Frame: Min. 2-6 Months
And only then, the real work begins:
PMI (post merger integration)…
Ethics in M&A
Strong reputation attracts buyers as well as
yields higher returns through price premiums.
Moral philosophy offers various perspectives:
Duty / Intention
Lead vs. Supporting Roles
Buyers and sellers shareholders.
Supporting roles include:
Board of Directors
Employees and other stakeholders
We outlined the course and its requirements.
Overviewed M&A history and process.
Discovered Dilbert’s thoughts on M&A…
Examined M&A roll in the Strategic process.
Discussed Ethics in M&A.