Big Deal

"The intellectual community in the early 1960s believed that the "best and the brightest" could manage anything and management skills were easily transferable between companies in unrelated industries."

"Stripping away the technical and legal jargon, the leveraged acquisition process is quite simple?the acquisition of a company is financed largely with borrowed money. The company's own cash flow or assets serve as the main security for the loan. "

"Economic activity as a whole is benefited by the active acquisition and divestiture marketplace, which allows young companies to be bought and mature companies to adapt to changing circumstances."

"Critics argue managers do deals simply because managing a larger business provides greater prestige, as well as access to more perks, a higher salary, or a higher share price?increasing the value of their stock options. "

"This is the core of the merger business: the development of a sound and executable corporate strategy at a justifiable price."

"Convergence brings the theoretical promise of cross-selling?enhancing revenues by selling each merger partner's products through the other's distribution channels. "

"Operational difficulties have been deal catalysts, pushing some companies to seek a white knight acquirer with a healthy balance sheet, or to sell businesses or parts of businesses."

"The acquisition of the "eyeballs" that Web sites reach?akin to viewership for television?is the lifeblood for Internet content providers. "

"The intensity of big-deal M&A draws individuals who thrive under the pressure, while otherwise highly capable people find they have no taste for the roller-coaster binges of intellectual effort."

"A common mistake buyers make is to leap into the morass of evaluation without first thinking about context."

"The architecture of a deal must be designed with the complex mosaic of corporate law, the tax code, and accounting rules firmly in mind."

"Implementing a deal requires a blend of psychology, business judgment, and technical dexterity."

"The common theme in financing a deal is that an acquirer should match its book: Long-term cash needs should be met with long-term financing sources, short-term needs with short-term sources."

"The identity and sentiment of a target company's stockholders is a critical issue in any hostile takeover, as are their feelings about incumbent management."

"State antitakeover laws generally apply to companies which are either incorporated in the state in question or which conduct a substantial part of their business in the state."

"If directors decide a strategic shift is timely, they consider the relative merits of three alternatives?some sort of sale or merger, a corporate spin-off, or the issuance of a targeted stock. "

"Most companies have some sense of their vulnerabilities, but a disciplined analysis crystallizes the intuitions. Working from this foundation, a company can build effective defensive battlements, reducing the vulnerabilities."

"A company can initiate a wide variety of financial and operational changes in response to a potential bid. Common strategies include a leveraged recapitalization, the purchase of outstanding shares, or a spin-off or split-off."