PricewaterhouseCoopers' transaction services provides in-depth insights on critical M&A issues gleaned from advising many of the world's leading corporations and private equity firms.
TS insights provides strategic thinking on a wide-range of issues affecting the deal community.
Proactive insurance risk management at private equity portfolio companies adds value to the bottom line - November 2008
In the current market where deal activity is challenging and the initial public offering market is on hold, effective insurance risk management (IRM) at portfolio companies is one of the ways for private equity sponsors and management to drive value. Because of resource constraints, private equity sponsors concentrate on top priority initiatives, abandoning many other worthwhile savings programs, including IRM opportunities that could lead to potential cash savings in the millions. However, with an outside adviser these opportunities can be captured by private equity sponsors.
Investing in distressed: Not for all - October 2008 From retail to consumer cyclical to restaurants to automotive to financial services, the number of business restructuring announcements has increased. Stock prices have plummeted. Margins are being squeezed. The signs are all around us: excess leverage, operating losses, weak management and strategy or operations not built for a downturn. Now may be the right time for investing in distressed.Crossing the K-12 digital divide: Understanding and playing in a complex market - May 2008 Impetus for change coupled with market fragmentation in many sectors has created opportunities for corporate and financial investors. Since relatively little market information exists to guide dealmakers, our goal is to shed light on this rapidly evolving market, identifying its major segments, the nature of the competition, and other things investors should know before entering this market.
Assessing risk as energy traders come back in play - April 2007 When energy merchants began exiting their trading businesses after Enron imploded five years ago, some investment banks saw an opportunity to assume trading positions that energy companies' balance sheets could no longer support. But trading barrels, megawatts and decatherms is not quite the same as trading stocks, bonds and mutual funds. So before jumping in, financial investors need to conduct thorough diligence on a target's trading book in order to fully assess the unique risks this market presents.
Collateral damage: Don't overlook insurance on your next deal - December 2006 Because private equity deals typically rely on debt financing, any potential limits on borrowing should be uncovered early in the diligence process. The diligence team should also explore strategies for lowering future collateral requirements after the deal closes.
Cleaning up on ethanol – August 2006
As gasoline prices remain around $3 a gallon, ethanol—once used to power trucks and tractors in the Midwest—is touted nationwide as a viable renewable alternative to fossil fuels. Even without a price crunch, ethanol use is likely to increase because the Renewable Fuel Standard in the Energy Policy Act of 2005 mandates that the amount of renewable and biofuels in regular gasoline nearly double in six years, from 4.0 to 7.5 billion gal./yr. by 2012.The case for developing better divestiture practices in a hot M&A market – April 2006
To win on the exit and the acquisition, and avoid mistakes that diminish the value of sell side deals, you'll need to become a prepared seller with a more disciplined framework. This issue discusses the benefits of preplanning and enhancing the divestiture process. New UK pensions act limits foreign owners' control and could raise required cash contributions - November 2005
Does a company you own, or one you plan to buy or sell have a UK defined pension plan? If so, beware: the 2004 UK Pensions Act-designed to increase protection for pension plan participants due to escalating pension deficits-is having a major impact on the viability and pricing of transactions, as well as on required cash contributions to defined benefits plans. This issue of TS Insights highlights what has changed, and the actions US companies subject to the new law need to take. The company they keep: targets in multiemployer plans can pose added risk for acquirers - August 2005
Acquisition candidates that participate in multiemployer pension and health plans present additional risks that require thorough evaluation during due diligence. This issue looks at the risks that multiemployer benefit plans carry.The British are coming! Europeans enter the US defense market – June 2005
The British are leading the charge, accounting for 20 of the 23 cross-border acquisitions of US defense firms, with French and Italian firms beginning to mobilize as well. This issue explores the dynamics behind breaking into the US market and how US and foreign defense companies can benefit from this trend.
Deal Flash!® provides late breaking news on regulatory developments affecting the deal community.
Why financial reporting valuation matters on private equity deals – April 2007 Because private equity investors do not always incorporate pure GAAP financial metrics in valuing a target upon acquisition or exit, financial statement presentation may not be one of their top priorities. But those who have sustained a surprise hit to earnings or EBITDA, or had a closing or exit delayed because of financial reporting issues may think differently. Such issues could become more common with the use of fair value reporting, unless the financial reporting valuation process is managed properly and valuation and accounting competencies appropriately combined.
Software revenue recognition rules could affect deals in other sectors – June 2006
Whether installed on a PC, embedded on a semiconductor chip that runs the latest electronic gadget, or preinstalled as part of a network router, software is becoming a more critical component of many products and services. This issues of Deal Flash!® looks at how revenue recognition deals affect deals.Do you speak IFRS? Why the new accounting language matters for private equity investors – May 2006 With a substantial portion of the world committed to using IFRS, US private equity funds that operate globally can no longer afford to ignore its impact. Differences between IFRS and US GAAP treatments will affect deal structuring, due diligence and post-acquisition analysis.Keeping current on IFRS: An update for US CFOs - May 2006 US companies with overseas parents or competitors, as well as those looking to do deals in countries that require IFRS, must become conversant with these standards and stay tuned for new developments.Why CFOs need to know about IFRS – September 2005
International Reporting Standards (IFRS) are the accounting rules all public companies in the European Union must follow, with another 100 countries either implementing or considering them. So why should this concern a US company? This issue of Deal Flash!® explores seven good reasons. Got control? Really, what did you expect! – September 2005
The tension between management's desire to present financial results in their most positive light, and investor and regulator demands for more transparency didn't begin with Enron. But after Enron's demise, regulators took a hard look at rules previously used to determine who controls (and should consolidate) an entity. This publication highlights key differences in US GAAP and IFRS consolidation rules, and how recent changes to both can affect your deals. Expensing stock options has a bright side – March 2005
This Deal Flash!® discusses some of the major effects the new standard will have on the design of equity awards, including those drawn up following an acquisition. With the new standard scheduled to take effect in July 2005 for public companies, and January 2006 for private ones, deal principals should lose no time in assessing how the new rule will affect their current and future equity compensation and employee retention strategies. Seller beware: danger and difficulty lurk in discontinued operations – February 2005
Companies routinely sell off poorer-performing or non-core businesses in order to enhance the value of their remaining operations. Many such companies prefer to present themselves to the capital markets on a "with and without" basis even before the sale occurs. This Deal Flash!® traces recent rules on this accounting treatment, and suggests some steps companies can take to minimize the risk of encountering accounting "surprises" when they attempt to qualify for discontinued operations reporting. It's not what you buy but how you buy it! Tax consequences of asset vs. stock acquisitions in Brazil. - January 2005
Applying new accounting rules that began taking effect over two years ago was an academic exercise for some companies still digesting the acquisitions they made in the late nineties. This Deal Flash!® highlights what we consider to be the most significant changes-those most likely to have an impact on the way deal principals evaluate and negotiate mergers, acquisitions, and other types of transactions.
Forecasts provide outlooks on the US M&A market and examine recent and developing M&A trends.
2009 M&A activity to be fueled by 'merger of necessity' Financing continues to be a challenge while distressed opportunities across industries are available for interested buyers. Innovation will be key for private equity as the industry evolves in the new climate.
US mid-year outlook: Private equity firms reinvent themselves in challenging credit environment Inbound M&A activity recovering and getting stronger In the current credit market where access to syndicated loans to finance large transactions is limited, private equity firms look for alternatives ways to deploy capital, focusing on distressed investing, private investments in public entities (PIPEs), partnering with corporate buyers and minority investments. Inbound investments into the United States will continue for the remainder of the year and accelerate into 2009, according to the Transaction Services group of PricewaterhouseCoopers.
Roundtables explore M&A issues facing and strategic thinking of corporate development executives.
Investing in China's next wave: Finding opportunities, building value – April 2006
While China's growing economy offers many investment opportunities to dealmakers, they need to balance the opportunities against the complexity and uncertainty they will face when doing business in this country. Besides intellectual property issues, complex and changing tax policies, limited information and cultural differences, investors need to consider China's regulatory changes impacting management buyouts, stock market reform and foreign exchange policy.
Doing deals in emerging markets – October 2005
Companies that made investments in China years back are enjoying the fruits of their ventures today, highlighting the advantages of going global. This Corporate Development Roundtable summary explores the challenges and opportunities of expanding into China and other foreign territories, and how to increase probability of success investing in volatile M&A markets. Investing in Latin America: When, where and how – May 2006
Latin America, a region with many cultures and economies, is a large emerging market that offers businesses in various industries significant growth opportunities. It is also a region where economic rewards and growth can be hindered by political uncertainty. This publication sheds light on the inherent risks, investment structures, partnerships, due diligence and other key deal issues when doing a transaction in this region. Managing divestitures for value and liquidity – March 2005
Companies sell businesses for three inter-related reasons: to meet corporate strategic goals, to take advantage of an opportunity to sell a property at its peak value or to raise cash during hard times. While these reasons seem clear enough on paper, the panelists at our corporate development roundtable will tell you that assessing when it is time to sell and then carrying it off successfully is a demanding task. The impact of Sarbanes-Oxley on M&A transactions – Spring 2004
The Sarbanes-Oxley Act of 2002 (the Act) is having a profound impact on the way US corporations are governed and managed, and the corporate development function is not immune to its effects. The Act doesn't explicitly mention M&A, making it easy to overlook any impact. However, dealmakers who fail to consider the implications of the Act will be in for some unpleasant surprises.
Using joint ventures to achieve strategic objectives – October 2003
Joint venture deals: no one likes them, but almost everyone does them! PricewaterhouseCoopers asked leading M&A executives to talk about the hard lessons they've learned in structuring, managing and ending equity joint ventures. Their experiences serve as valuable guidelines to companies contemplating similar transactions.
M&A in Silicon Valley – June 2003
In June 2003, PricewaterhouseCoopers invited 10 executives from leading technology companies for a roundtable discussion on M&A in Silicon Valley. This report summarizes their insights.
People, corporate culture and communications: The human side of M&A – May 2003
When the deal is done, who will run the new company? How do you assess the corporate culture of the target company and prepare to create a new one? How do you decide who to keep? What incentives will keep and motivate your best people? How will the employees react? Leading M&A executives addressed these issues and talked about their companies' successes and failures in understanding and managing the human reactions and upheavals caused by mergers and acquisitions.
M&A Insights is a series of industry or country reports and insights examining the recent trends that affect M&A.
2008 US aerospace & defense M&A insights
This report offers insights on the changing A&D industry and highlights the key trends likely to drive deal activity in the next six to 12 months.Financial services M&A insights: Transactions in a volatile environment
The financial services industry experienced mixed fortunes in 2007 driven by the sub-prime mortgage situation that forced well-established financial institutions to take large write-offs. That said, US mergers and acquisitions continued unabated across financial services sectors. In 2007, we witnessed a total of 1,033 transactions (disclosed and non-disclosed), up 4 percent from 993 deals in 2006. There was a noticeable decline in activity in the latter half of 2007, and this trend continued in the first half of 2008.
M&A insights: 2008 Analysis and trends in Mexican M&A activity
2007 was a banner year for mergers and acquisitions involving Mexico-based companies both as buyers and as sellers. In a favorable investment environment of steady growth, low inflation, a stable currency and ample reserves, 44 Mexico-based businesses worth $10.1 billion changed hands last year compared with 50 companies valued at $8.3 billion in 2006. As a result, average deal size involving a Mexico-based target rose from $167 million to $230 million. Industrial products and energy were the most active industries in terms of value in 2007, followed by retail, consumer products and construction. M&A insights: Analysis and trends in Mexican activity
Welcome to the first edition of our M&A Insights focusing on Mexican mergers and acquisition (M&A) activity. Our goal is to provide investors, buyers and sellers, who are interested in the Mexican M&A arena, with an overview of recent economic and regulatory changes affecting dealmakers and trends driving M&A activity in the country. Most importantly, it highlights significant financial, tax and information technology/operations issues that typically arise when doing deals in Mexico.
2007 US M&A insights—Entertainment and media – March 2007
With a flurry of mega deals announced in the last two quarters of the year, 2007 may prove to be a more robust year than 2006. Besides private equity's continued interest in this industry, there are several key trends spurring 2007 deal activity. To find out what these key drivers are, please view report.
2006 US M&A insights – Entertainment & media – August 2006
Merger and acquisition activity in the US entertainment and media (E&M) industry is on a strong growth trajectory, and this year is projected to reach levels not seen since 2001, according to "PricewaterhouseCoopers' 2006 M&A insights-US entertainment and media industry", published by PricewaterhouseCoopers' transaction services E&M practice.
US IPO watch is a quarterly survey of all IPOs listed on US exchanges. These include IPOs by domestic and foreign companies, best-efforts, business development companies, filings with the FDIC, and bank demutualizations. IPOs do not include unit investment trusts and fully classified closed-end funds.
The number of initial public offerings (IPOs) in the United States (US) has declined for three straight quarters as volatility in the US economy continues unabated. For the first nine months of 2008, there were 54 IPOs that raised $31.2 billion, a significant drop from the 195 offerings that generated $44.7 billion for the same period in 2007. When the $17.8 billion VISA IPO is excluded from the 2008 results, IPO value for the first nine months was just $13.3 billion.
IPO activity for the third quarter of 2008 was the most sluggish third quarter performance since 2002. US IPO activity for the first three quarters of 2008 was hampered by the prolonged volatility in the equity markets and the crisis in the credit markets--deterring non-US issuers and causing planned IPOs to be postponed or withdrawn, SPACs to lose their momentum and financial sponsors to hold on to their portfolios for a bit longer.
2007 US IPO watch: Analysis and trends
The turmoil in the credit markets might have slowed the pace of M&A in the second half of 2007; however, it didn’t hinder IPO activity. The fourth quarter of 2007 saw 101 IPOs—the highest quarterly IPO volume in eight years—raise $20.4 billion. As predicted in our 2006 US IPO watch report, 2007 IPO activity exceeded that of 2006. There were 296 offerings that raised $65.1 billion in 2007 compared to 236 listings that raised $49.9 billion in the prior year. In fact, 2007 was the strongest IPO market we have seen since 2000 when 429 IPOs raised $92.6 billion.
US IPO watch: 2006 analysis and trends 2006 turned out to be a good year for IPOs on US exchanges, with 236 IPOs raising $50 billion compared with $39 billion from 221 IPOs in 2005. Financial sponsors drove this growth as proceeds from financial sponsor-backed IPOs rose 64 percent last year. Diversification of IPO activity across industry sectors also differentiated the 2006 IPO market from prior years. With 64 IPOs raising $12.1 billion during the first quarter, 2007 is off to a strong start. These numbers compare favorably with $11.9 billion from 56 IPOs in 2006.
M&A related publications such as initial public offerings, M&A publications in specific industries and others.
How timing your transactions in light of the new standards will impact your business and communications with stakeholders
This first installment of Mergers & acquisitions: A snapshot focuses on how the accounting treatment for M&A transactions will depend considerably on whether the deal closes before or after the effective date of the new standards—there will be a significant difference between the accounting for deals closing before the standards take effect (i.e., in 2008) and those closing after that (i.e., in 2009). Where commercially feasible, some companies may want to change the timing in which a deal will close to achieve a company’s desired financial reporting treatment for their particular transaction.The new regime: Impact of Fair Value Measurements (FAS 157) on private equity
Three private equity chief financial officers and one PwC valuation partner gathered in midtown Manhattan to discuss the impact of FAS 157 on their valuation procedures. PricewaterhouseCoopers on Chinese companies going global
Lately, Chinese companies have stepped onto the global stage, with an expanding portfolio of international mergers and acquisitions. Outbound foreign direct investment from China was reported by the Chinese government to be $19 billion in 2007, and for the first four months of 2008, outbound activity was reported at $20 billion. As increasing numbers of Chinese companies look to global markets for access to resources, customers, intellectual property (IP) and technology, they face cultural, talent, and financial reporting and legal challenges along the way. Find out what PricewaterhouseCoopers China M&A partners Ben Ye and Ken Su have to say about the factors driving Chinese companies to go global, and the challenges they confront along the way.FAS 141R and FAS 160: What you need to know about the new accounting standards affecting M&A transactions
In early December 2007, the Financial Accounting Standards Board (FASB) issued two new standards that changes the way companies will account for and report their deals. The International Accounting Standards Board (IASB) has issued related standards in January 2008. The new US standards, FAS 141R, business combinations, and FAS 160, noncontrolling interests in consolidated financial statements, not only put a greater focus on financial reporting as it moves toward fair value; they also call for heightened diligence and valuation. Although these changes will not be effective until 2009 and early adoption is prohibited, dealmakers should be aware of how these changes will affect their M&A process and their ability to get the deal done.
New voices in M&A: The evolving role of finance and accounting professionals - June 2007
The M&A finance and accounting functions are evolving at many Silicon Valley technology companies. Instead of relying solely on resources from the corporate finance staff for help with acquisitions, companies are setting up teams of finance specialists who are entirely or largely dedicated to M&A. Panelists at our Silicon Valley roundtable described how they have come to play a more critical and specialized role in M&A often acting as a counter- balance to deal fever.
How proactive due diligence informs M&A strategy
The realities of the market dictate that strategic acquirers are likely to continue competing against or--in a more recent trend--collaborating with private equity firms. When negotiating with sophisticated investors such as private equity firms who typically have in-house industry experts and substantial knowledge of your market, reliable up-front information is crucial. If you are partnering with private equity, having your homework done will improve the outcome of your collaboration. In this article, buyers and sellers will learn how to use a proactive due diligence process to enhance any transaction's value, speed up the deal process and conduct more successful negotiations.
Due diligence considerations in aerospace and defense Consolidation of the US aerospace and defense sector continues, due to fewer prime contractors, more procurement, and steady increases in the Department of Defense's (DoD) base budget, which is expected to rise seven percent in 2007. Buyers often face challenges when assessing the financial condition of an acquisition target because of imperfect information and limited access to management. To win in a competitive situation, successful acquirers must take steps to understand a business sooner and more deeply than their competitors.Private equity insight: Dividend recapitalizations
The use of dividend recapitalizations by private equity firms has generated many buzzes in the media. To garner insight into current issues facing dividend recaps and assess the outlook for their use in 2007, Pepper Hamilton and PricewaterhouseCoopers commissioned Remark, mergermarket's research and publications division, to survey 75 North American private equity firms with $500M or more under management. For survey results and insights on dividend recaps, please view report.
Going public: A guide for North American companies listing on the US securities markets - November 2005
Taking a company through a public offering on the US securities market is a huge undertaking for any entrepreneur. This guide can help companies to anticipate what may be required of them in their dealing with the US. Securities and Exchange Commission, other US regulators, investors and analysts. Entering the United States securities markets – September 2005
A private or public offering in the United States can provide a company with an infusion of long-term capital that can fuel growth and enhance shareholder value. Non-US PricewaterhouseCoopers Global Capital Markets Group has developed this publication to serve as a practical and valuable guide to entering the US securities markets. Going public? The right IPO advisor could hold the key to success – March 2005
As IPOs rebound, R&C companies are reentering the equity markets to raise the funds they need for growth. Scott Gehsmann, North American leader of our Global Capital Markets Group, discusses the critical and sometimes overlooked role of an IPO accounting advisor. By identifying governance, reporting, and structural issues early, managing expectations, and advising on the SEC registration process, an experienced IPO advisor can free management to focus its time and effort where it adds the most value: the marketing phase of the IPO.
