Money from Mergers: A Primer for the Beginner or Seasoned Campaigner for Corporate Mergers and Acquisitions

By Nicholas Jewczyn

This book is dedicated to three groups of people - investors, advisors, and academics. Investors are always concerned with "what to do" concerning money. Financial Advisors are always concerned with "how to do it" concerning money. Professors and students are always concerned with "why to do it" concerning money. This text actively engages the members of all three of those groups and it provides industrial strength solutions from economic history, from three decades of mergers and acquisitions history, so that people will gain an insight into the what, how, and the why of how money was actually made, and by whom, concerning corporate mergers and acquisitions. If you are looking for a repository reference that ties all three of these aspects together in one place - this book is for you.

• Language: English
• Publisher: AuthorHouse
• Release date: Jan 14, 2014
• ISBN: 9781491843284

Nicholas Jewczyn

Nicholas Jewczyn (pronounced JEFF' - sin) was graduated from Southern Illinois University with a practical business degree in remedial, front-line management. His Master of Business Administration was taken at the New York Institute of Technology where he was graduated at the top of his class with a cumulative 3.95 GPA and major specializations in Finance and in Economics and Strategy. While at N.Y.I.T., he was inducted into Omicron Delta Epsilon for outstanding achievement in the Field of Economics as a graduate student (2007). After a stint of several terms as a college professor, and General Studies Chairman at a local college, teaching seven courses per term in the Fields of Accounting, Business, Economics, and Finance (at three college campuses onsite), the author was nominated by his college students and inducted into Phi Delta Kappa for excellence in teaching at the collegiate level (2009). The author was inducted into Sigma Iota Epsilon (2009) for excellence as a doctoral student in the Field of Management. He was also inducted into Golden Key International Honour Society (2011) for high scholastic honors as a doctoral student. Mr. Jewczyn's Ph.D. program is in Business Administration (projected graduation in 2012 with a 3.94 GPA) with a specialization in Financial Management and he still teaches Management and Strategy courses at local colleges. The author has been traveling extensively and presenting his new research at international business and economics conferences, where he monitors new academic research and is the Session Chair over presentation areas such as Education and Accounting. The author sits on the editorial review board of five, international, peer-reviewed, scholarly, scientific journals (London, Singapore, and New York) and is a prolific author who publishes a number of business and economics scholarly articles every year. The author was just awarded best research article in the Field of Economics at an international business conference. To read his several dozen publications at the public archive for scientific research, log on to: http://www.researchgate.net. Science fiction is a departure from business teaching and writing and is a personal favorite as a change of pace while working on the dissertation. For further information, see the author's Curriculum Vitae at: http://www.nsjcv.com.

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© 2014 Nicholas Jewczyn, Ph.D. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse 01/10/2014

ISBN: 978-1-4918-4327-7 (sc)

ISBN: 978-1-4918-4328-4 (e)

Library of Congress Control Number: 2013923076

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Contents

About the Book

Disclaimer

Dedication

Preface

Acknowledgements

Abstract

Theory

Current Research

Practical Application

Theory

Introduction

Wave of Diverse Company Mergers

Functional Roles in Mergers and Acquisitions

Functional Roles in Mergers

and Acquisitions Summary

Modes in Mergers and Acquisitions

Mergers and Acquisitions

Synergies Relating to Efficiency Theory

Empire Building Theory

Related Theories

Related Theories’ Summary

Theory Synthesis

Summary

Current Research

Annotated Bibliography

Literature Review Essay

Summary

Application

Introduction

Application Essay

Summary

References

Appendix 1

Introduction

References

Curriculum Vitae

ABOUT THE BOOK

This book is dedicated to three groups of people - investors, advisors, and academics. Investors are always concerned with what to do concerning money. Financial Advisors are always concerned with how to do it concerning money. Professors and students are always concerned with why to do it concerning money. This text actively engages the members of all three of those groups and it provides industrial strength solutions from economic history, from three decades of mergers and acquisitions history, so that people will gain an insight into the what, how, and the why of how money was actually made, and by whom, concerning corporate mergers and acquisitions. If you are looking for a repository reference that ties all three of these aspects together in one place - this book is for you.

DISCLAIMER

This text concerns research into economic history and was meant to address the time period of U.S. corporate mergers and acquisition waves occurring between the years of 1965 and 1990. An economic history is not intended to be current or future investment recommendations nor is it investment advice. There is nothing contained in this text that should be taken as current or future investment recommendations or investment advice. The entire reason that this text was written and published was to inform and educate the consumer public. Upon reading and understanding the content of this text, if the determination is ever made by the reader, or by anyone with whom the reader makes contact, to invest any money in anything, the reader or assigns should consult with an attorney, stock broker, and CPA—paid professionals who are in place to serve the public who will help you.

DEDICATION

This book is dedicated to three groups of people—investors, advisors, and academics. Investors, from my time at a federal wirehouse and private equity brokerage, which catered to High Net Worth clients, were always concerned with what to do concerning money. Financial Advisors (from my experience in both worlds—a federal wirehouse that owned several federal banks and fostered transactional trading and a private equity brokerage that promoted managed money) always seemed to be most concerned with how to do it concerning money. Professors (from my time as associate faculty teaching college-level accounting, business, economics, and finance) and students of finance and economics always seemed to be concerned with why to do it concerning money. This text actively engages the members of all three groups and the text also provides industrial strength solutions from economic history, from the actual conduct of mergers and acquisitions for a period of almost three decades, so that people will gain an insight into the what, how, and the why of how money was actually made, and by whom, concerning this important, corporate activity. If you are looking for a repository reference that ties all three of these aspects together in one place—this book is for you.

PREFACE

This book grew from a study project in my doctoral program. Although a doctoral program is generally not for the faint of heart, in my case, my doctoral program was a necessity in order to gain the necessary entrance to professional academics and the resultant academic research and publishing activities. As a professional academic and full-time university professor (70,000+ students—I typically teach graduate students), my duties have evolved to the extent that I have assumed responsibilities in addition to teaching. The predominant activities that account for my time and role are: a role as Subject Matter Expert (SME) for the Field of Finance; a representative to or chair of committees that deal with business and finance learning outcomes and course and curricula development; and service work involving business and finance internally within the university and externally to the community. As a financial economist in public practice, I am called upon by many who continue to view me as the Methodologist of Last Resort, a thorough peer-reviewer for academic journal articles, or as a technical editor for international academic journals. As a former stock broker, I help the industry (after being nominated by other stock brokers in the industry to become a sort of federal judge) under the Federal Neutral Arbitrator Act—I am a federal neutral arbitrator who arbitrates disagreements and decides cases involving the input from respondent and claimant legal counsel teams. These cases involve Broker/Dealers, Self-Regulatory Organizations (SROs), or clients of brokerage firms. This observation should be some rationale for why a portion of this text has already appeared in a prominent law journal. However, this text is the only place to obtain the entire document, from which a portion was already used in that journal, so that it is possible to see the entire source and obtain the rest of the story. The manner of prose in this text is an easy-reading primer on the subject of mergers that supports the beginner or seasoned campaigner. Enjoy!

ACKNOWLEDGEMENTS

As a university professor, I can assure you that we always learn the most from the questions asked by our students. In teaching, I am not so much concerned by what students think as opposed to how they think. By engaging in a rigorous regimen of the syllogism and the concomitant logic funnel while writing, supported by Bloom’s Taxonomy, I have enormous confidence in my students, in the realization that success leaves clues, and in the conviction that a provided track to run on will eventually evolve into a personal decision-making process that supports success. To that end, I wanted to acknowledge and thank my previous students (many of whom asked many of the right questions), my previous instructors and professors (who actively engaged me and prompted me when researching and publishing, instead of asking why, to ask why not?), and my many colleagues, friends, family and the leadership of my many fraternal organizations who were always there for me as a support network while I actively engaged in research and publication. My daily efforts reflect an attitude of gratitude. I wanted to take this opportunity to extend my many thanks to the principal faculty, administration, and leadership who smoothed the way and brought me to a large and well-respected university—they are truly the very ones who really make a book like this feasible, probable, and possible. Long after the remains of my progeny have returned to the dust from whence they came, my support network of colleagues and friends will have made possible the conceivable contribution, in some small way, of this text to the body of knowledge we now know as finance and to the Field of Financial Economics. Money is really only a tool and is considered by most active business people and finance professionals to be merely a form of inventory. Always remember—those who have supportive friends are truly among the wealthiest on earth.

ABSTRACT

Theory

The demonstration will include a discussion of the various tenets of company mergers and acquisitions (M&A) and will further include a comparison and contrast of the synthesis of M&A theory during the diverse companies’ merger wave that occurred during the years from 1965 to 1990. The discussion will include a comparison of efficiency theory, using the three synergies of financial, operational, and managerial, and empire building theory, and how empire building served the requirements of agency theory, in order to address mergers, including the types such as horizontal, vertical, conglomerate, arm’s length, and strategic, to address M&A synergistic realization, absolute performance, and relative performance. The demonstration will include an evaluation of the strengths and limitations of the tenets of mergers and acquisitions, as espoused by the principal theorists, for the purpose of establishing how the theorists’ cumulative, theoretical work has contributed to the development of company mergers and acquisitions theory, and to the development of a platform of values that is useful in mergers and acquisitions, as it relates to M&A synergistic realization, absolute performance, and relative performance.

Current Research

The research component will be comprised of two parts. The first part will be an annotated bibliography of 15 cited sources (i.e., refereed journal articles written in the past three years) around the theory topic objectives. The second part of the research component will consist of a research literature review essay of some two-dozen pages on those topic objectives.

Practical Application

The application component will consist of the development of a theoretical, overall structure of a presentation that could be used in a specific application to conduct symposia and to act as a primer for the conduct of acquirer firm M&A activity, with respect to the considerations and expectations for the conduct of such acquirer firm M&A activity, and whether such M&A activity would even be warranted after a familiarization with certain aspects of M&A activity. The application component will include a scholarly essay of about 10 pages and will critically evaluate this theoretical presentation of some 25 pages of slides and notes in light of the theories from the theory component and the research from the current research component.

THEORY

Introduction

The theory component of this demonstration will include a discussion of the various tenets of company mergers and acquisitions (M&A) and will further include a comparison and contrast of the synthesis of M&A theory during the diverse companies’ merger wave that occurred during the years from 1965 to 1990. The discussion will include a comparison of efficiency theory, using the three synergies of financial, operational, and managerial, and empire building theory, and how empire building served the requirements of agency theory, in order to address mergers, including the types such as horizontal, vertical, conglomerate, arm’s length, and strategic, to address M&A synergistic realization, absolute performance, and relative performance. The demonstration will include an evaluation of the strengths and limitations of the tenets of mergers and acquisitions, as espoused by the principal theorists, for the purpose of establishing how the theorists’ cumulative, theoretical work has contributed to the development of company mergers and acquisitions theory, and to the development of a platform of values that is useful in mergers and acquisitions, as it relates to M&A synergistic realization, absolute performance, and relative performance.

Wave of Diverse Company Mergers

Original source researchers leading into the period of merger activity under discussion indicated that a merger was the amalgamation of multiple companies into one economic unit, presumably on a friendly basis, whereas an acquisition was