Mergers & Acquisitions
Mergers & Acquisitions ( M&A ) is a collective term for transactions in the corporate sector such as mergers , company acquisitions , company transfers , leveraged takeovers , outsourcing / insourcing , spin-offs , carve-outs or corporate collaborations . The sector of service providers involved in this, such as lawyers , tax consultants , management consultants , auditors and investment banks , is also aggregated under Mergers & Acquisitions ; In the investment banking sector, M&A is a sub-area of corporate finance .
The Anglo-Saxon word combination Mergers & Acquisitions consists of two terms that already give a rough indication of the entrepreneurial activities that are summarized under it. “Mergers” are company mergers, “acquisitions” are company acquisitions. The aim of every entrepreneur is to secure his own existence and to achieve growth through suitable measures. Growth is only possible to a very limited extent in the form of internal growth (e.g. by increasing sales); Greater growth successes can only be achieved in the short term through external growth . That, in turn, is only possible through mergers, company acquisitions or other external transactions. That the buyer ( "Investor") and acquired companies (target companies or shortly goal, english target ) immediately increased by the merger significantly to sales , the market share , the company size and the market power of the purchase consent company. If one abstracts from the partial services of other parties such as law firms or investment banks, then mergers & acquisitions include "the process and the result of the strategically motivated purchase or merger of companies or parts of companies and their subsequent integration or resale."
The pair of terms Mergers & Acquisitions has existed since the first wave of takeovers in the USA, which began in 1895. Since then, there has been no uniform definition. There have been five M&A waves in the US in the past, so M&A is a cyclical phenomenon. There was a first wave from 1897 to 1904 mainly with horizontal integrations , a second wave followed between 1916 and 1929 in the form of completion through vertical integration , the third wave followed from 1965 to 1969 and mainly focused on diversification through conglomerate integrations , a fourth The wave with mostly vertical disintegrations took place between 1984 and 1989, the fifth wave began in 1993 and ended in 2000 with predominantly globally integrated motifs. In the USA, the type of transaction of hostile takeover has been conceptually established since 1974; the largest transaction in terms of amount in Germany so far was the hostile takeover of Mannesmann Mobilfunk by Vodafone in February 2000 with a volume of 198 billion euros.
The Cartel Ordinance of November 1923 was the first attempt in Germany to control the wave of mergers and to slow down cartel formation. The first cartel law of March 1933 authorized the Nazi government to merge companies in the interests of the economy as a whole in compulsory cartels . After the Second World War , in July 1945 the military governments dissolved and banned all compulsory cartels as part of a de-cartelation . The German anti-competitive law (Kartellgesetz) in the version dated July 15, 2005 contains a general ban on cartels with exceptions and includes preventive cartel control. Conditions, discounts, standardization and standardization and pure export cartels are notifiable and are subject to abuse control; Crisis, rationalization and foreign trade cartels require the approval of the cartel authorities. Similar regulations can be found in Austria in the cartel law from 2005; restrictions also apply to cartels in Switzerland (Federal Cartel Act of October 6, 1995).
The listing of the subtypes of M&A opens up the variety of entrepreneurial activities in this area. In a merger by incorporation , the acquiring company takes on the assets and debts of the target company, which loses its existence (a + b = a). The merger through the establishment of a new company leads to the merger of two companies and the subsequent establishment of a new company (a + b = c). A significant part of M&A activity is related to company acquisitions and leveraged takeovers. Company acquisitions differ from mergers in that there is a change of owner, which in the case of a company acquisition leaves the company management to the investor. Borrowed acquisitions are characterized by a high proportion of borrowed capital when financing the purchase price . Outsourcing , insourcing , spin-offs and carve-outs that fall under “corporate restructuring” are also important . Cooperation can in turn be divided into strategic and operational cooperation. In strategic cooperations , companies work together voluntarily as in joint ventures and strategic alliances ; operational cooperations can be interest groups , consortia , working groups or cartels .
M&A transactions usually begin with a search for suitable targets ( deal search ). This is followed by the evaluation of selected goals ( due diligence check ), followed by negotiations with the shareholders and / or the management of the target company ( deal negotiation ), which are recorded in a term sheet . A letter of intent can confirm the intention of both parties to successfully complete this transaction. The bilateral contract drafting ( deal documentation ) is supported by law firms , auditors , management consultants or investment banks . After the purchase has been completed, the investor's investment controlling ( deal monitoring ) ensures permanent monitoring of the development of the target, which may later be sold again ( exit ).
If the M&A transaction (English signing ) is concluded and all of the conditions listed therein are met, the contracts are fulfilled on both sides (English closing ). Companies are often also sold under the leadership of investment banks within the framework of auction procedures (“controlled auction”). Only certain investors (bidders) are admitted as prospective buyers. Separate and confidential negotiations are conducted with each bidder. The company is eventually sold to the investor who (from the seller's point of view) offers the most favorable contract terms and the highest purchase price.
Which legal transactions are necessary in order to be able to conclude a certain M&A transaction with legal effect depends on the type of transaction. In most cases (company acquisition, takeover, merger) a company purchase agreement is the basis.
The purchase law ( company purchase agreements . The purchase itself is not tied to a particular form in Germany , but there are regulations that make it necessary to notarise the company purchase agreement in individual cases. The acquisition of shares in a GmbH must regularly be notarised ( (4) GmbHG). This also applies if a property is part of the company's assets ( (1) BGB). According to Section 311b (3) BGB, a company purchase agreement must also be notarized within the meaning of BGB in conjunction with ff. According to the rulings of the Reichsgericht and the Federal Court of Justice, notarial certification can be avoided if the individual asset components are specifically named and listed in full in the company purchase agreement. However, this requires a seamless contract drafting in order to exclude the risk of missing notarial certification and nullity. In the cited decision of March 26, 2010, the Higher Regional Court of Hamm declared the purchase contract in the specific case null and void due to the lack of a notarial form. The parties had included a list of inventory and inventory items as well as various, precisely defined claims in the company purchase agreement, but also agreed to take over "all assets" and not expressly included trademark rights and various furnishings from the assets of the GmbH in the company purchase agreement. In contrast to land purchase contracts and assignments of the shares in accordance with Section 15 (4) GmbHG, in this case the missing notarial form could not be cured by the execution of the purchase contract. If these contractual requirements are missing, the company purchase agreement is void due to a lack of form according to BGB .BGB ff.) Is applicable to
In addition, antitrust issues must be checked regularly , in particular whether the acquisition of a company is subject to an obligation to register and notify the Federal Cartel Office or the European antitrust authorities ( merger control ).
According to the Anglo-Saxon legal principle Caveat emptor , the buyer bears the risk that the object of purchase is free of obvious material and legal defects . “May the buyer watch out” is a legal principle used in Anglo-Saxon “ common law ”, particularly when it comes to company acquisitions. It is therefore the risk of the buyer to record all the circumstances relating to a purchased item and to identify any defects. The risk initially lies solely with the buyer, who enjoys no legal protection. It is therefore an international practice to minimize or even exclude the buyer risk through due diligence . The seller may not withhold the circumstances known to him - as in German law - however. Even in Germany, company acquisitions usually no longer take place without prior due diligence . According to prevailing opinion and jurisprudence, due diligence is therefore not part of the traffic custom . It should not only eliminate the supposed buyer risk, but primarily serves to determine the purchase price.
Studies on M&A put the failure at around two thirds of all transactions, which is often due to the inadequate integration of corporate cultures. However, the question of the success criterion often arises here. Most studies look at the stock exchange price or the profit and loss account or the indicator of whether the company taken over was later sold ("stay or sell"). Examples of the latter in German-speaking countries are e.g. B. the purchase of Dresdner Bank by Allianz and the subsequent sale to Commerzbank or the acquisition of Winterthur Versicherung by Credit Suisse and the subsequent sale to AXA Versicherung or the purchase of Chrysler by Daimler Benz and the subsequent sale of Chrysler. For a large number of companies and M&A transactions, however, neither stock exchange prices nor financial statements are available because they are either not listed or their business figures are not subject to publication (see for a comprehensive overview of success studies and a large-scale survey with German participation).
The success of M&A is often less than expected because either the strategic considerations are misguided, purchase prices are paid that are too high or the expected cost and value synergies (e.g. economies of scale) do not materialize or are overcompensated by integration and coordination costs . The potential synergies are usually interpreted very ambitiously in order to justify the premium paid (difference between market value and purchase price).
Success studies on the subject of M&A often only consider one dimension of M&A. In a 2007 study, Thomas Straub came to the conclusion that all dimensions (strategic logic, integration aspects, financial aspects / price) have a significant influence on success.
- Gerhard Picot (Ed.): Company purchase and restructuring. (Handbook on Business Law). 3rd, completely revised and expanded edition. CH Beck, Munich 2004, ISBN 3-4065-1464-2 .
- Ralf Ek, Philipp von Hoyenberg: Company purchase and sale. Basics, design, liability, tax and labor law, takeovers (= dtv 50646 Beck legal advisor ). Deutscher Taschenbuch-Verlag et al., Munich 2007, ISBN 3-423-50646-6 (dtv).
- Thomas Straub: Reasons for Frequent Failure in Mergers and Acquisitions. A Comprehensive Analysis. Deutscher Universitäts-Verlag (DUV), Wiesbaden 2007, ISBN 978-3-8350-0844-1 (Also: Geneva, University, dissertation, 2006).
- Stephan A. Jansen: Mergers & Acquisitions. Company acquisitions and collaborations. A strategic, organizational and capital market theoretical introduction. 5th, revised and expanded edition. Gabler, Wiesbaden 2008, ISBN 978-3-8349-0365-5 .
- Bernd W. Wirtz, Mergers & Acquisitions , 2003, p. 12.
- Bernd W. Wirtz, Mergers & Acquisitions , 2003, p. 11.
- Bernd W. Wirtz, Mergers & Acquisitions , 2003, p. 6.
- Conglomerate mergers are mergers between companies whose relationship is neither purely horizontal nor vertical
- Stephan A. Jansen, Mergers & Acquisitions , 2008, p. 62 ff.
- Fritz Neske / Markus Wiener (eds.), Management-Lexikon , Volume IV, 1985, p. 1532.
- Thomas Blaha, The institutional mergers and acquisitions business in Germany , 2008, p. 42.
- analogous to Gerhard Picot, in: Picot (Ed.), Unternehmenskauf und Restructuring 3rd edition 2004, p. 23 ff.
- See on this Wolfgang Hölters, in: Hölters (Hrsg.), Handbuch des Unternehmens- und Beteiligungskauf , 6th edition 2005, part I
- Michael Rozijn, NZG 2001, 494 ff. (Especially footnotes 43 f.)
- Gerhard Picot, in: Picot, Unternehmenskauf und Reststrukturierung , 2nd edition, 1998, part I, marginal number 11 ff.
- OLG Hamm, judgment of March 26, 2010, Az .: I-19 U 145/09
- RG from November 12, 1908 in RGZ 69, 416, 420 f; BGH of October 30, 1990, Az .: IX ZR 9/90
- Ralf Bergjan, The Effects of the Law of Obligations Reform on Company Acquisitions, 2002, p. 96 ff.
- Shirin Maria Massumi, Quo Vadis company purchase agreements , 2008, p. 105.
- Shirin Maria Massumi, Quo Vadis company purchase agreements , 2008, p. 185.
- Buy companies now! Neue Zürcher Zeitung from May 26, 2008.
- Uwe Böning, Takeovers and Mergers - Psychology is not everything, but without psychology everything is nothing , in: Günter Müller-Stewens et al. (Ed.), Mergers & Acquisitions - Analyzes, Trends and Best Practices , 2010, pp. 346–358.
- so-called "event studies", in which the hypothetical abnormal return of the stock exchange price reactions is calculated in a certain time window of mostly 10 days before and after the announcement of the transaction
- Stephan A. Jansen, "Management of Business Combinations", 2004.
- "Takeovers destroy value", in Handelsblatt Enterprises and Markets , May 3, 2006, p. 17.
- Abstract at Springer.com : Reasons for Frequent Failure in Mergers and Acquisitions , accessed on September 8, 2017.
- Thomas Straub: Reasons for Frequent Failure in Mergers and Acquisitions - A Comprehensive Analysis , Deutscher Universitäts Verlag (DUV), Gabler Wissenschaft, 2007, ISBN 978-3-8350-0844-1 .