Browsing by Subject "M&A"
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Item How information asymmetry affects contract design : paying for private firms with IOU's(2016-05) Jansen, Mark; Parrino, Robert, 1957-; Fracassi, Cesare; Almazan, Andres; Hartzell, Jay; Starks, Laura; Abrevaya, JasonThis dissertation examines a financing mechanism that is common in the acquisition of privately-held firms. Using a novel database of transactions in which the target firm is private, this paper shows that sellers receive a debt claim as a contingent payment for the firm that is being sold. The debt claim, which takes the form of seller financing, is secured by the assets of the target firm. I show that proxies for information asymmetry are correlated with the presence of seller financing as payment in the transaction. I also find that when the firm is more likely to have received a financial audit, the transaction is less likely to include seller financing. Since financial audits improve firm transparency, I interpret this as evidence that a reduction in information asymmetries between the parties of a acquisition affect the deal structure. A complementary explanation for the use of seller financing is related to capital constraints faced by buyers in the financing of the transaction. I present evidence that contract structures are affected by cross-sectional and time-series changes in the supply of local investment capital for buyouts. I find that seller financing is less common in areas in which locally informed capital is more abundant. I also find that transactions contain a lower percentage of seller financing in city-years in which Small Business Administration provides loan guarantees for the acquisition and expansion of firm’s loan guarantees are higher. The evidence suggests that seller financing is solving a contracting problem because it is unaffected by controls for local banking activity.Item Mergers and acquisition – post merger IT integration(2012-05) Deshmukh, Rani; McCann, Robert Bruce, 1948-; Nichols, Steven Parks, 1950-“All marriages are happy. It’s the living together afterwards that causes all the trouble.” - Raymond Hull, Canadian Playwright. Although Mergers and Acquisitions are common, no merger is termed as successful until post merger integration is successful. During M&A, two companies that function uniquely are fused together, and the Information Technology group is expected to consolidate two different systems efficiently. This integration should be well-executed, and without any disruption to business or customers. Every merger is different, and can have innumerable reasons for failure, ranging from poor implementation strategies to cultural or attitudinal problems. One of the reasons, many Post-Merger Integration activities fail, is due to the Information Technology complexity and inadequacy to address the issues, it brings to the table. This thesis aims at studying the importance of post-merger Information Technology (IT) integration and developing an IT strategy for the integration. There are no scientific guidelines laid out for a post-merger IT integration and each company employs its own methods. Hence the author has researched and developed a post-merger IT integration framework that can give definitive approach and assist in seamless integration. This framework includes practices that can be followed for a smooth IT transition and checklist to ensure successful integration. Lastly the author presents two cases of M&A that illustrate the importance of IT integration, namely, Sallie Mae- USA Group and HP-Compaq. Sallie Mae & USA Group was a huge success due to its successful IT integration implementation while HP-Compaq merger was a disappointment for the lack of understanding the importance of IT integration. From these two cases, the author has also derived the usefulness of the proposed framework. Author has also presented another case of Oracle-Sun merger, which does an analysis of the IT integration carried out by the two companies. It would not be unwise to say, that IT plays an ever increasing pervasive role in today’s organizations, hence a successful merger demands successful IT integration.