1. The M&A market

1. Factors

   Annotations:

   • - Shocks - Liquidity - Low cost of capital - Overvaluation of acquirer - Business confidence
2. Importance

   Annotations:

   • - Reward early participants, penalies late.
3. Similarities

   Annotations:

   • - Econmics growth - Low interest rates - Rising stock market
4. FIS

Annotations:

• Basic: - M&A value creation measured by stock market. - Abnormal returns: Above what expected withoug M&A.

1. High for target

   Annotations:

   • Depends on - Private or subs - Small acquirer - Small target - Form of payment . Early in cycle.
2. No evidence of better strategies

1. Operational synergies
   1. Financial synergies
      1. Diversification
         1. Strategic realignement
            1. Managerialism / Hubris
               1. Undervalued assets
                  1. Agency problems
                     1. Tax considerations
                        1. Market power
                           1. Misvaluation
   2. SyDiMaMaStraBuTa

1. Overpayment of synergies
   1. Slow pace of integration
      1. Poor strategy
2. OPS

1. Main functions
   1. Allocate resources to sectors
      1. Discipline failing management
2. Promote good corporate governance
   1. Imporve financial performance
   2. Goal:Maximize shareholder value
   3. Factors
      1. External

         Annotations:

         • - Legislation - Market - Regulators - Institutional activism
         1. Internal

            Annotations:

            • - Board - Incentive systems - Culture and values
         2. Takeover tactics

            Annotations:

            • - Friendly - Hostile
            1. Defenses

               Annotations:

               • Poison pills Shark repellents Green mail Pac man White knight Leverage recapitalation Share buy back ESPOS