Due Diligence for Global Deal Making The

This new book is an invaluable guidebook for companies trying to capitalize on the opportunities in both developed and emerging cross-border markets. Noted experts discuss critical topics corporate executives--and all those involved with their company's legal, accounting, and tax matters--need to know to successfully complete complex, global transactions.

Arthur Rosenbloom is managing director of CFC Capital Corp. and former chairman of the board of Patricof & Co. Capital Corp. His contributions on investment banking-related topics have appeared in Forbes, BusinessWeek, the Harvard Business Review, and the National Law Journal. An adjunct professor of finance at the Stern Graduate School of Business at New York University and NYU Law School, he also is a trustee of New York's Citizens Budget Commission, a member of its Competitiveness Subcommittee, and an active member of the panel of arbitrators of the American Arbitration Association and the New York Stock Exchange.

About the Contributors

xiv

Due Diligence in the Global Economy

1

(12)

Arthur H. Rosenbloom

What Is Due Diligence?

3

(1)

Types of Due Diligence

4

(1)

Who Is Involved in Due Diligence?

4

(2)

What Constitutes Legal Due Diligence?

6

(1)

What Constitutes Financial Due Diligence?

7

(2)

What Constitutes Operational Due Diligence?

9

(2)

Integrating Due Diligence Efforts

11

(2)

Strategic Due Diligence

13

(38)

Geoff Cullinan

Tom Holland

Strategy Precedes Due Diligence

14

(1)

Reviewing Your Strategy

15

(3)

Costs

15

(1)

Customers

16

(1)

Competitors

16

(1)

Capabilities

17

(1)

Achieving Value

18

(4)

Factoring in Cross-Border Complexities

22

(1)

Identifying Your Strategic Rationale

23

(5)

Active Investing

23

(1)

Scale

24

(1)

Adjacency

24

(1)

Scope

25

(1)

Transformation

25

(3)

Undertaking Thorough Due Diligence

28

(7)

Market Definition

29

(1)

Industry Dynamics and Trends

29

(2)

Competitor Market Map

31

(1)

Competitor Dynamics

31

(1)

Competitor Benchmarking

31

(1)

Customer Analysis, Input Costs, and Price Elasticity

32

(1)

Growth Opportunities

33

(2)

Cross-Border Complications

35

(1)

Key Factors in Evaluating Strategic Rationales

36

(1)

Due Diligence for Scale-Driven Transactions

37

(4)

Due Diligence for Adjacency-Driven Transactions

41

(2)

Due Diligence for Scope-Driven Transactions

43

(1)

Due Diligence for Transformation-Driven Transactions

44

(1)

Assessing Your Findings

45

(6)

Checklist: Cross-Border Strategic Due Diligence

48

(3)

Operational Due Diligence

51

(50)

Linda D. Arrington

Nelson M. Fraiman

Carolyn E.C. Paris

Michael L. Pinedo

Operational Due Diligence in the Cross-Border Context

52

(1)

Designing Due Diligence from a Strategic Perspective

53

(1)

Validating and Integrating Other Due Diligence Efforts

54

(3)

Serving as the Foundation for the Integration Plan

55

(1)

Serving in Support of Deal Strategy and Pricing

55

(2)

What Should Operational Due Diligence Cover?

57

(1)

Mapping the Value-Creation Process

58

(5)

Products and Services, Market Positioning and Brand, Sales and Distribution, and Customers

58

(3)

Manufacturing or Other Production of Goods/Services

61

(1)

Procurement of Supplies and Supply-Chain Management: Possible Related Reconfiguration of Distribution Processes, External Infrastructure Requirements, and System Cash Needs

62

(1)

Systems and Know-How Support of the Value-Creation Process

63

(2)

People, Training, and Corporate Culture

65

(3)

What Can Go Wrong

68

(4)

Deals That Got It Right

72

(29)

Checklist: Cross-Border Operational Due Diligence

75

(26)

Financial and Accounting Due Diligence

101

(48)

Jorge M. Diaz

Addressing All Aspects---Whether Large or Small

103

(1)

Financial Due Diligence Procedures

104

(10)

How to Verify the Numbers

106

(3)

Inbound Transactions

109

(1)

Outbound Transactions in Developed Countries

110

(3)

Outbound Transactions in Emerging Markets

113

(1)

Accounting Due Diligence Procedures

114

(35)

Integrity and Qualifications of Company Personnel, Their Practices, and Ethical Standards

119

(1)

Relationship with Independent Certified Public Accountants

120

(2)

Considerations in Evaluating Key Accounting Issues

122

(5)

Statutory, Regulatory, and Legal Requirements

127

(1)

Industry Accepted and Generally Accepted Accounting Principles

128

(1)

Industry Practices

129

(1)

Income Tax Laws and Regulations

130

(1)

Data Processing Systems

131

(1)

Political Environment in the Target's Country

132

(2)

Checklist: Cross-Border Financial and Accounting Due Diligence

134

(15)

Legal Due Diligence

149

(60)

Norman J. Resnicow

Clifford A. Rathkopf

``Legalese'' across Borders

150

(1)

The Purpose of Legal Due Diligence: Insurance against the Unknown

151

(1)

A Good Deal Is Vastly Better Than a Good Lawsuit

152

(2)

Defensive Due Diligence in U.S. Public Securities Issuance Transactions: Proving Enough Was Done

154

(1)

Forces Working to Limit Due Diligence: Quick Decision Makers versus Slow Scriveners

155

(2)

Avoiding Ruffled Feathers and Missed Opportunities

157

(1)

Fitting Due Diligence into the Structure and Timing of the Deal: Sooner Is Better

158

(2)

Organizing and Executing Legal Due Diligence: The Buck Stops at the Top

160

(9)

Assigning Qualified Personnel

160

(4)

Organizing and Delegating Duties

164

(1)

Ensuring a Searching Investigation

165

(2)

Communicating Results Effectively

167

(2)

Certain Key Risk Exposure Areas in Legal Due Diligence

169

(21)

Environmental

169

(4)

Antitrust

173

(4)

Intellectual Property

177

(5)

National Security Implications

182

(1)

Litigation

183

(3)

Security Interests of Creditors

186

(2)

Terminating Employment and Marketing Relationships without Liability

188

(2)

The Preferred Result of Legal Due Diligence: No News Is Good News

190

(19)

Checklist: Cross-Border Legal Due Diligence

191

(18)

Tax Due Diligence

209

(44)

Robert T. Bossart

Compliance versus Planning

209

(1)

Due Diligence Coordination

210

(1)

Local, National, and International Perspective

211

(1)

A Word about Joint Ventures

211

(1)

Taxable Purchase of Assets

212

(20)

Understanding the Target's Operations and Structure

212

(4)

International Federal Tax Compliance Due Diligence

216

(4)

Foreign Subsidiary Shares as Part of the Target's Assets

220

(2)

Transfer Pricing

222

(2)

Nonfederal Tax Due Diligence in an Asset Acquisition

224

(5)

Asset Acquisition Planning Opportunities: Overview

229

(3)

Taxable Share Purchases

232

(7)

Tax Compliance

233

(1)

Transactions and Tax Reserves

233

(2)

Consolidated Returns, Attributes, and Accounting Methods

235

(1)

Withholding Taxes

235

(1)

Employee Benefits

236

(1)

Foreign Tax Credits and Exemptions

237

(1)

Tax Attributes

238

(1)

Structuring the Share Acquisition

238

(1)

Tax-Free Exchanges

239

(14)

Checklist: Cross-Border Tax Due Diligence

241

(12)

People and Organizational Due Diligence

253

(50)

Cynthia N. Wood

Richard C. Porter

General Considerations

254

(5)

Strategic Objectives

254

(1)

Type of Deal

255

(1)

Composition of the Organizational Due Diligence Team

256

(1)

Impact of Organizational Experience and Cultural Milieu

257

(1)

Negotiations

258

(1)

Key Components of Organizational Due Diligence

259

(44)

Organizational Performance Measures

259

(2)

Cultural Factors

261

(4)

Mission, Vision, and Values

265

(2)

Communications Patterns and Processes

267

(3)

People Issues

270

(5)

Overall Organizational Structure

275

(3)

Functional Areas

278

(17)

Checklist: Cross-Border Organizational Due Diligence Process

295

(8)

Due Diligence Investigative Technology and Know-How

303

(20)

James B. Mintz

How Investors Use Private Investigators

303

(1)

How Investigative Technology Can Help

304

(3)

The International Public Record

304

(1)

The Hometown Newspaper

305

(2)

The Backgrounds of Key Executives

307

(4)

Prime Questions Investigators Must Explore

307

(4)

Resolution through Follow-up Investigation

311

(1)

The Business Practices of the Target Company

311

(7)

Regulatory Issues

312

(3)

Concerns about Intellectual Property

315

(1)

Business Disputes

316

(2)

Increased Pressure on Due Diligence Professionals

318

(5)

Checklist: Due Diligence Investigative Technology and Know-How

320

(3)

Appendix: Cross-Border Due Diligence in an Age of International Terrorism

323

(10)

Index

333

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The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.

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Due Diligence for Global Deal Making The Definitive Guide to Cross-Border Mergers and Acquisitions, Joint Ventures, Financings, and Strategic Alliances

Summary

Author Biography

Table of Contents

Supplemental Materials