The Leaf-Chronicle is a newspaper in the state of Tennessee , founded, officially, in 1808.
133-636: First appearing as a weekly newspaper under various names as early as 1808 and eventually as the Clarksville Chronicle , the current name is the result of a subsequent merger , in 1890, with the Tobacco Leaf , named for the area's predominant agricultural crop. (See Goodspeed's History of Tennessee, pg. 817) The Leaf-Chronicle is published daily in Clarksville, Tennessee . The Leaf-Chronicle achievement that has perhaps received
266-794: A felony .... Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony .... Federal judges quickly began struggling with the broad wording of the Sherman Act, recognizing that interpreting it literally could make even simple business associations such as partnerships illegal. They began developing principles for distinguishing between "naked" trade restraints between rivals that suppressed competition and other restraints that were merely "ancillary" to cooperation agreements that promoted competition. The Sherman Act gave
399-403: A felony , and, on conviction thereof, shall be punished by fine not exceeding $ 100,000,000 if a corporation , or, if any other person, $ 1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. — Sherman Act 1890 § 1 Preventing collusion and cartels that act in restraint of trade is an essential task of antitrust law. It reflects
532-689: A monopoly ", and the Hart–Scott–Rodino Act requires notifying the U.S. Department of Justice 's Antitrust Division and the Federal Trade Commission about any merger or acquisition over a certain size. An acquisition/takeover is the purchase of one business or company by another company or other business entity. Specific acquisition targets can be identified through myriad avenues, including market research, trade expos, sent up from internal business units, or supply chain analysis. Such purchase may be of 100%, or nearly 100%, of
665-539: A broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest. Surveys of American Economic Association members since the 1970s have shown that professional economists generally agree with the statement: "Antitrust laws should be enforced vigorously." In the United States and Canada , and to a lesser extent in the European Union ,
798-405: A business retain just a handful of key players that would have otherwise left. Organizations should move rapidly to re-recruit key managers. It's much easier to succeed with a team of quality players that one selects deliberately rather than try to win a game with those who randomly show up to play. Mergers and acquisitions often create brand problems, beginning with what to call the company after
931-569: A business, which accrues to both categories of stakeholders, is called the Enterprise Value (EV), whereas the value which accrues just to shareholders is the Equity Value (also called market capitalization for publicly listed companies). Enterprise Value reflects a capital structure neutral valuation and is frequently a preferred way to compare value as it is not affected by a company's, or management's, strategic decision to fund
1064-418: A center for tobacco growing and shipping. Early newspapers started out as four-page journals devoted to political news and advertising . Eventually they grew to become full-fledged publications that featured more news and community information, in addition to having opinion pages with political views. In 1890, The Clarksville Chronicle merged with The Tobacco Leaf , forming The Clarksville Leaf-Chronicle . In
1197-569: A clear precedent, to which the situation is analogous, proof of an anti-competitive effect is more difficult. The reason for this is that the courts have endeavoured to draw a line between practices that restrain trade in a "good" compared to a "bad" way. In the first case, United States v. Trans-Missouri Freight Association , the Supreme Court found that railroad companies had acted unlawfully by setting up an organisation to fix transport prices. The railroads had protested that their intention
1330-491: A complete newspaper that featured eight pages of tornado coverage. Within four days, the staff was able to print from the downtown newspaper press, only slightly damaged. The departments worked out of an empty grocery store for eight months, until the main offices were rebuilt and reopened in the fall of 1999. Washer retired in 2008 and remains the newspaper's publisher emeritus. He was replaced by Andrew Oppmann, also publisher of Murfreesboro's Daily News Journal . Also in 2008,
1463-473: A function of their acquisition activity. Therefore, additional motives for merger and acquisition that may not add shareholder value include: The M&A process itself is a multifaceted which depends upon the type of merging companies. The M&A process results in the restructuring of a business's purpose, corporate governance and brand identity. An arm's length merger is a merger: ″The two elements are complementary and not substitutes. The first element
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#17327833866021596-433: A larger and/or longer-established company and retain the name of the latter for the post-acquisition combined entity. This is known as a reverse takeover . Another type of acquisition is the reverse merger , a form of transaction that enables a private company to be publicly listed in a relatively short time frame. A reverse merger is a type of merger where a privately held company, typically one with promising prospects and
1729-579: A legal and financial point of view, both mergers and acquisitions generally result in the consolidation of assets and liabilities under one entity, and the distinction between the two is not always clear. Most countries require mergers and acquisitions to comply with antitrust or competition law . In the United States , for example, the Clayton Act outlaws any merger or acquisition that may "substantially lessen competition" or "tend to create
1862-426: A merger or acquisition transaction can range from political to tactical. Ego can drive choice just as well as rational factors such as brand value and costs involved with changing brands. Beyond the bigger issue of what to call the company after the transaction comes the ongoing detailed choices about what divisional, product and service brands to keep. The detailed decisions about the brand portfolio are covered under
1995-436: A merger, a tender offer or a hostile takeover. As an aspect of strategic management , M&A can allow enterprises to grow or downsize , and change the nature of their business or competitive position. Technically, a merger is the legal consolidation of two business entities into one, whereas an acquisition occurs when one entity takes ownership of another entity's share capital , equity interests or assets . From
2128-445: A monopoly in any line of commerce. — Clayton Act 1914 §3 In theory predatory pricing happens when large companies with huge cash reserves and large lines of credit stifle competition by selling their products and services at a loss for a time, to force their smaller competitors out of business. With no competition, they are then free to consolidate control of the industry and charge whatever prices they wish. At this point, there
2261-534: A monopoly. The FTC and the Justice Department both have the authority to file lawsuits seeking to block or invalidate unlawful mergers. The FTC may challenge a merger in its own administrative court instead of filing a lawsuit in a United States district court , although defendants can appeal the FTC's decisions to one of the United States courts of appeals . In addition to the FTC and the Justice Department,
2394-444: A need for financing, acquires a publicly listed shell company that has few assets and no significant business operations. The combined evidence suggests that the shareholders of acquired firms realize significant positive "abnormal returns," while shareholders of the acquiring company are most likely to experience a negative wealth effect. Most studies indicate that M&A transactions have a positive net effect, with investors in both
2527-467: A number of exemptions. Mergers and joint agreements of professional football, hockey, baseball, and basketball leagues are exempt. Major League Baseball was held to be broadly exempt from antitrust law in the Supreme Court case Federal Baseball Club v. National League . The court unanimously held that the baseball league's organization meant that there was no commerce between the states taking place, even though teams traveled across state lines to put on
2660-443: A party must wait 30 days while the FTC or the Justice Department reviews the merger and decides whether to seek to block it. The 30-day period usually ends with the FTC or Justice Department taking one of three actions: declining to challenge the merger, filing a lawsuit to challenge the merger, or issuing a "Second Request" that extends the waiting period and formally asks the party for all its documents and other information relating to
2793-550: A private party may also file a lawsuit under the Clayton Act if an unlawful merger has injured its ability to compete for business. Under the Hart–Scott–Rodino (HSR) Act of 1976 , any party wanting to execute a merger or acquisition must report it in advance to the FTC and the Justice Department, unless the sizes of the transaction and the parties executing it are both below certain thresholds. After filing its HSR report,
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#17327833866022926-610: A proposed merger was illegal even though the resulting company would have controlled only five percent of the relevant market. In a now-famous line from his dissent in the 1966 decision United States v. Von's Grocery Co. , Supreme Court justice Potter Stewart remarked: "The sole consistency that I can find [in U.S. merger law] is that in litigation under [the Clayton Act], the Government always wins." The "structuralist" interpretation of U.S. antitrust law began losing favor in
3059-434: A situation where one company splits into two, generating a second company which may or may not become separately listed on a stock exchange. As per knowledge-based views, firms can generate greater values through the retention of knowledge-based resources which they generate and integrate. Extracting technological benefits during and after acquisition is an ever-challenging issue because of organizational differences. Based on
3192-416: A small number of competitors or oligopolists , have led to significant controversy over whether or not antitrust authorities should intervene. Fourth, vertical agreements between a business and a supplier or purchaser "up" or " downstream " raise concerns about the exercise of market power , however they are generally subject to a more relaxed standard under the "rule of reason". Some practices are deemed by
3325-550: A special committee of independent directors; and 2) conditioned on an affirmative vote of a majority of the minority stockholders, the business judgment standard of review should presumptively apply, and any plaintiff ought to have to plead particularized facts that, if true, support an inference that, despite the facially fair process, the merger was tainted because of fiduciary wrongdoing.″ A Strategic merger usually refers to long-term strategic holding of target (Acquired) firm. This type of M&A process aims at creating synergies in
3458-468: A total value of US$ 2,164.4 bil. Some of the largest mergers of equals took place during the dot-com bubble of the late 1990s and in the year 2000: AOL and Time Warner (US$ 164 bil.), SmithKline Beecham and Glaxo Wellcome (US$ 75 bil.), Citicorp and Travelers Group (US$ 72 bil.). More recent examples this type of combinations are DuPont and Dow Chemical (US$ 62 bil.) and Praxair and Linde (US$ 35 bil.). An analysis of 1,600 companies across industries revealed
3591-456: Is friendly or hostile . Achieving acquisition success has proven to be very difficult, while various studies have shown that 50% of acquisitions were unsuccessful. "Serial acquirers" appear to be more successful with M&A than companies who make acquisitions only occasionally (see Douma & Schreuder, 2013, chapter 13). The new forms of buy out created since the crisis are based on serial type acquisitions known as an ECO Buyout which
3724-420: Is a cartel . It is irrelevant whether or not the businesses succeed in increasing their profits, or whether together they reach the level of having market power as might a monopoly . Such collusion is illegal per se . Bid rigging is a form of price fixing and market allocation that involves an agreement in which one party of a group of bidders will be designated to win the bid. Geographic market allocation
3857-478: Is a co-community ownership buy out and the new generation buy outs of the MIBO (Management Involved or Management & Institution Buy Out) and MEIBO (Management & Employee Involved Buy Out). Whether a purchase is perceived as being "friendly" or "hostile" depends significantly on how the proposed acquisition is communicated to and perceived by the target company's board of directors, employees, and shareholders. It
3990-426: Is a triangular merger, where the target company merges with a shell company wholly owned by the buyer, thus becoming a subsidiary of the buyer. In a "forward triangular merger ", the target company merges into the subsidiary, with the subsidiary as the surviving company of the merger; a "reverse triangular merger" is similar except that the subsidiary merges into the target company, with the target company surviving
4123-426: Is also little motivation for investing in further technological research, since there are no competitors left to gain an advantage over. High barriers to entry such as large upfront investment, notably named sunk costs , requirements in infrastructure and exclusive agreements with distributors, customers, and wholesalers ensure that it will be difficult for any new competitors to enter the market, and that if any do,
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4256-411: Is an agreement between competitors not to compete within each other's geographic territories. If an antitrust claim does not fall within a per se illegal category, the plaintiff must show the conduct causes harm in "restraint of trade" under the Sherman Act §1 according to "the facts peculiar to the business to which the restraint is applied". This essentially means that unless a plaintiff can point to
4389-425: Is between two competitors in the same industry. A vertical merger occurs when two firms combine across the value chain, such as when a firm buys a former supplier (backward integration) or a former customer (forward integration). When there is no strategic relatedness between an acquiring firm and its target, this is called a conglomerate merger (Douma & Schreuder, 2013). The form of merger most often employed
4522-399: Is combined into another entity by operation of the corporate law statute(s) of the jurisdiction of the merging entities. In a transaction structured as a merger or an equity purchase, the buyer acquires all of the assets and liabilities of the acquired entity. In a transaction structured as an asset purchase, the buyer and seller agree on which assets and liabilities the buyer will acquire from
4655-425: Is complete, the parties may proceed to draw up a definitive agreement, known as a "merger agreement", "share purchase agreement," or "asset purchase agreement" depending on the structure of the transaction. Such contracts are typically 80 to 100 pages long and focus on five key types of terms: Following the closing of a deal, adjustments may be made to some of the provisions outlined in the purchase agreement, such as
4788-426: Is important because the directors have the capability to act as effective and active bargaining agents, which disaggregated stockholders do not. But, because bargaining agents are not always effective or faithful, the second element is critical, because it gives the minority stockholders the opportunity to reject their agents' work. Therefore, when a merger with a controlling stockholder was: 1) negotiated and approved by
4921-412: Is normal for M&A deal communications to take place in a so-called "confidentiality bubble," wherein the flow of information is restricted pursuant to confidentiality agreements. In the case of a friendly transaction, the companies cooperate in negotiations; in the case of a hostile deal, the board and/or management of the target is unwilling to be bought or the target's board has no prior knowledge of
5054-415: Is possible only when resources are exchanged and managed without affecting their independence. A corporate acquisition can be structured legally as either an "asset purchase" in which the seller sells business assets and liabilities to the buyer, an "equity purchase" in which the buyer purchases equity interests in a target company from one or more selling shareholders or a "merger" in which one legal entity
5187-464: Is provided by full-service investment banks- who often advise and handle the biggest deals in the world (called bulge bracket ) - and specialist M&A firms, who provide M&A only advisory, generally to mid-market, select industries and SBEs. Highly focused and specialized M&A advice investment banks are called boutique investment banks . The dominant rationale used to explain M&;A activity
5320-487: Is that acquiring firms seek improved financial performance or reduce risk. The following motives are considered to improve financial performance or reduce risk: Megadeals—deals of at least one $ 1 billion in size—tend to fall into four discrete categories: consolidation, capabilities extension, technology-driven market transformation, and going private. On average and across the most commonly studied variables, acquiring firms' financial performance does not positively change as
5453-466: The Attorney General , to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of
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5586-556: The Federal Trade Commission (FTC), the Antitrust Division of the U.S. Department of Justice , and private parties who have been harmed by an antitrust violation. Criminal antitrust enforcement is done only by the Justice Department's Antitrust Division. Additionally, U.S. state governments may also enforce their own antitrust laws, which mostly mirror federal antitrust laws, regarding commerce occurring solely within their own state's borders. The scope of antitrust laws, and
5719-403: The Federal Trade Commission , can bring civil lawsuits enforcing the laws. The United States Department of Justice alone may bring criminal antitrust suits under federal antitrust laws. Perhaps the most famous antitrust enforcement actions brought by the federal government were the break-up of AT&T's local telephone service monopoly in the early 1980s and its actions against Microsoft in
5852-527: The GTE Sylvania Court ruled that non-price vertical restrictions in contracts were no longer per se illegal and should be analyzed under the rule of reason. Overall, the Supreme Court's antitrust rulings during this era on collusion cases under section 1 of the Sherman Act reflected tension between the older "absolutist" approach and the newer Chicago endorsing the rule of reason and economic analysis. The Justice Department and FTC lost most of
5985-658: The Gannett Newspaper Division. The offices of The Leaf-Chronicle were severely damaged in the January 22, 1999 tornado; however, the paper was still released the following day, after then publisher F. Gene Washer took editors and reporters into his home to gather news and used the Kentucky New Era ' s printing press in Hopkinsville . The Saturday edition of The Leaf Chronicle was
6118-534: The Hudson's Bay Company merged with the rival North West Company . The Great Merger Movement was a predominantly U.S. business phenomenon that happened from 1895 to 1905. During this time, small firms with little market share consolidated with similar firms to form large, powerful institutions that dominated their markets, such as the Standard Oil Company , which at its height controlled nearly 90% of
6251-466: The Netscape browser. In 2000, the trial court ordered Microsoft to split in two, preventing it from future misbehavior. Microsoft appealed to the U.S. Court of Appeals for the D.C. Circuit , which affirmed in part and reversed in part. In addition, it removed the judge from the case for discussing the case with the media while it was still pending. With the case in front of a new judge, Microsoft and
6384-622: The Noerr-Pennington doctrine . Also, regulations by states may be immune under the Parker immunity doctrine . Fourth, the government may grant monopolies in certain industries such as utilities and infrastructure where multiple players are seen as unfeasible or impractical. Fifth, insurance is allowed limited antitrust exemptions as provided by the McCarran-Ferguson Act of 1945. Sixth, M&A transactions in
6517-525: The Progressive Era prompted public officials to increase enforcement of antitrust laws. The Justice Department sued 45 companies under the Sherman Act during the presidency of Theodore Roosevelt (1901–09) and 90 companies during the presidency of William Howard Taft (1909–13). In 1911, the U.S. Supreme Court reframed U.S. antitrust law as a " rule of reason " in its landmark decision Standard Oil Co. of New Jersey v. United States . At trial,
6650-754: The Sherman Act 1890 §7, these may be trebled, a measure to encourage private litigation to enforce the laws and act as a deterrent. The courts may award penalties under §§1 and 2, which are measured according to the size of the company or the business. In their inherent jurisdiction to prevent violations in future, the courts have additionally exercised the power to break up businesses into competing parts under different owners, although this remedy has rarely been exercised (examples include Standard Oil , Northern Securities Company , American Tobacco Company , AT&T Corporation and, although reversed on appeal, Microsoft ). Three levels of enforcement come from
6783-558: The associationalist view that close collaboration among business leaders and government officials could efficiently guide the economy. Some Americans abandoned faith in free market competition entirely after the Wall Street Crash of 1929 . Advocates of these views championed the passage of the National Industrial Recovery Act of 1933 and the centralized economic planning experiments during
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#17327833866026916-442: The 1970s, the city's name was dropped as the coverage area increased, shortening the title of the current newspaper to The Leaf-Chronicle . Throughout the city's history, other newspapers such as The New Herald (an African-American newspaper), The Clarksville-Jeffersonian , and The Clarksville Star competed with The Clarksville Leaf-Chronicle , but they are all now defunct. In December 1995, The Leaf-Chronicle became part of
7049-729: The Federal Trade Commission (FTC) as an independent agency that has shared jurisdiction with the Justice Department over federal civil antitrust enforcement and has the power to prohibit "unfair methods of competition". Despite the passage of the Clayton Act and the FTC Act, U.S. antitrust enforcement was not aggressive between the mid-1910s and the 1930s. Based on their experience with the War Industries Board during World War I , many American economists, government officials, and business leaders adopted
7182-634: The Federal government, primarily through the Department of Justice and the Federal Trade Commission, the governments of states, and private parties. Public enforcement of antitrust laws is seen as important, given the cost, complexity and daunting task for private parties to bring litigation, particularly against large corporations. The federal government, via both the Antitrust Division of the United States Department of Justice and
7315-800: The Great Merger Movement were able to keep their dominance in their respective sectors through 1929, and in some cases today, due to growing technological advances of their products, patents , and brand recognition by their customers. There were also other companies that held the greatest market share in 1905 but at the same time did not have the competitive advantages of the companies like DuPont and General Electric . These companies such as International Paper and American Chicle saw their market share decrease significantly by 1929 as smaller competitors joined forces with each other and provided much more competition. The companies that merged were mass producers of homogeneous goods that could exploit
7448-570: The Great Merger Movement. United States antitrust law In the United States , antitrust law is a collection of mostly federal laws that govern the conduct and organization of businesses in order to promote economic competition and prevent unjustified monopolies . The three main U.S. antitrust statutes are the Sherman Act of 1890 , the Clayton Act of 1914 , and the Federal Trade Commission Act of 1914 . These acts serve three major functions. First, Section 1 of
7581-477: The Justice Department had successfully argued that American petroleum conglomerate Standard Oil had violated the Sherman Act by building a monopoly in the oil refining industry through economic threats against competitors and secret rebate deals with railroads. On appeal, the Supreme Court affirmed the trial court's verdict, holding that Standard Oil's high market share was proof of its monopoly power and ordering it to break itself up into 34 separate companies. At
7714-622: The Justice Department's Antitrust Division , which had been established in 1919. This intellectual shift influenced American courts to abandon their acceptance of sector-wide cooperation among companies. Instead, American antitrust jurisprudence began following strict "structuralist" rules that focused on markets' structures and their levels of concentration . Judges usually gave little credence to defendant companies' attempts to justify their conduct using economic efficiencies , even when they were supported by economic data and analysis. In its 1940 decision United States v. Socony-Vacuum Oil Co. ,
7847-570: The NFL as a "cartel" of 32 independent businesses subject to antitrust law, not a single entity. Third, antitrust laws are modified where they are perceived to encroach upon the media and free speech, or are not strong enough. Newspapers under joint operating agreements are allowed limited antitrust immunity under the Newspaper Preservation Act of 1970 . More generally, and partly because of concerns about media cross-ownership in
7980-452: The Sherman Act outlawed "monopoliz[ation]" and "every contract, combination ... or conspiracy in restraint of trade". Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of
8113-511: The Sherman Act prohibits price fixing and the operation of cartels , and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that may substantially lessen competition or tend to create a monopoly. Third, Section 2 of the Sherman Act prohibits monopolization. Federal antitrust laws provide for both civil and criminal enforcement. Civil antitrust enforcement occurs through lawsuits filed by
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#17327833866028246-483: The Sherman Act. American courts were even stricter when hearing merger challenges under the Clayton Act during this era, due in part to Congress's passage of the Celler-Kefauver Act of 1950 , which banned consolidation of companies' stock or assets even in situations that did not produce market dominance. For example, in its 1962 decision Brown Shoe Co. v. United States , the Supreme Court ruled that
8379-935: The Sherman and Clayton Acts. Much of their economic analysis involved game theory , which showed that some conduct that had been thought uniformly anticompetitive, such as preemptive capacity expansion, could be either pro- or anticompetitive depending on the circumstances. The writings of Yale Law School professor Robert Bork and University of Chicago Law School professors Richard Posner and Frank Easterbrook , who all later became prominent federal appellate judges, translated Chicago economists' analytical advances into legal principles that judges could readily apply. Pointing out that economic analysis showed that some previously condemned practices were actually procompetitive and had economic benefits that outweighed their dangers, they argued that many antitrust bright-line per se rules of illegality were unwarranted and should be replaced by
8512-782: The Supreme Court refused to apply the rule of reason to an agreement between oil refiners to buy up surplus gasoline from independent refining companies. It ruled that price-fixing agreements between competing companies were illegal per se under section 1 of the Sherman Act and would be treated as crimes even if the companies claimed to be merely recreating past government planning schemes. The Court began applying per se illegality to other business practices such as tying , group boycotts , market allocation agreements, exclusive territory agreements for sales, and vertical restraints limiting retailers to geographic areas. Courts also became more willing to find that dominant companies' business practices constituted illegal monopolization under section 2 of
8645-507: The Supreme Court's 1974 decision United States v. General Dynamics Corp. , the federal government lost a merger challenge at the Supreme Court for the first time in over 25 years. In 1999 a coalition of 19 states and the federal Justice Department sued Microsoft . A highly publicized trial in the U.S. District Court for the District of Columbia found that Microsoft had strong-armed many companies in an attempt to prevent competition from
8778-550: The Supreme Court's decision in Standard Oil represented an effort by conservative federal judges to "soften" the Sherman Act and narrow its scope. Congress reacted in 1914 by passing two new laws: the Clayton Act, which outlawed using mergers and acquisitions to achieve monopolies and created an antitrust law exemption for collective bargaining ; and the Federal Trade Commission Act, which created
8911-409: The U.S. Department of Justice the authority to enforce it, but the U.S. presidents and U.S. Attorneys General in power during the 1890s and early 1900s showed relatively little interest in doing so. With little interest in enforcing the Sherman Act and courts interpreting it relatively narrowly, a wave of large industrial mergers swept the United States in the late 1890s and early 1900s. The rise of
9044-730: The United States , regulation of media is subject to specific statutes, chiefly the Communications Act of 1934 and the Telecommunications Act of 1996 , under the guidance of the Federal Communications Commission . The historical policy has been to use the state's licensing powers over the airwaves to promote plurality. Antitrust laws do not prevent companies from using the legal system or political process to attempt to reduce competition. Most of these activities are considered legal under
9177-450: The acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter. They receive stock in the company that is purchasing the smaller subsidiary. There are some elements to think about when choosing the form of payment. When submitting an offer, the acquiring firm should consider other potential bidders and think strategically. The form of payment might be decisive for
9310-512: The acquisition so the team can focus on projects for their new employer). In recent years, these types of acquisitions have become common in the technology industry, where major web companies such as Facebook , Twitter , and Yahoo! have frequently used talent acquisitions to add expertise in particular areas to their workforces. Merger of equals is often a combination of companies of a similar size. Since 1990, there have been more than 625 M&A transactions announced as mergers of equals with
9443-514: The assets and liabilities that pertain solely to the unit being sold, determining whether the unit relies on services from other parts of the seller's organization, transferring employees, moving permits and licenses, and safeguarding against potential competition from the seller in the same business sector after the transaction is completed. From an economic point of view, business combinations can also be classified as horizontal, vertical and conglomerate mergers (or acquisitions). A horizontal merger
9576-581: The assets or ownership equity of the acquired entity. A consolidation/amalgamation occurs when two companies combine to form a new enterprise altogether, and neither of the previous companies remains independently owned. Acquisitions are divided into "private" and "public" acquisitions, depending on whether the acquiree or merging company (also termed a target ) is or is not listed on a public stock market . Some public companies rely on acquisitions as an important value creation strategy. An additional dimension or categorization consists of whether an acquisition
9709-446: The business either through debt, equity, or a portion of both. Five common ways to "triangulate" the enterprise value of a business are: Professionals who value businesses generally do not use just one method, but a combination. Valuations implied using these methodologies can prove different to a company's current trading valuation. For public companies, the market based enterprise value and equity value can be calculated by referring to
9842-482: The buyer and target companies seeing positive returns. This suggests that M&A creates economic value, likely by transferring assets to more efficient management teams who can better utilize them. (See Douma & Schreuder, 2013, chapter 13). There are also a variety of structures used in securing control over the assets of a company, which have different tax and regulatory implications: The terms " demerger ", " spin-off " and "spin-out" are sometimes used to indicate
9975-469: The buyer. Hence, the analysis should be done from the acquiring firm's point of view. Synergy-creating investments are started by the choice of the acquirer, and therefore they are not obligatory, making them essentially real options . To include this real options aspect into analysis of acquisition targets is one interesting issue that has been studied lately. See also contingent value rights . Mergers are generally differentiated from acquisitions partly by
10108-474: The case; and pending such petition and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises. — Sherman Act 1890 § 4 The remedies for violations of U.S. antitrust laws are as broad as any equitable remedy that a court has the power to make, as well as being able to impose penalties. When private parties have suffered an actionable loss, they may claim compensation. Under
10241-450: The close of business at 2:00 pm each day at any price other than that day's closing price did not violate the Sherman Act. The Court said that although the rule was a restraint on trade, a comprehensive examination of the rule's purposes and effects showed that it "merely regulates, and perhaps thereby promotes competition." During the mid-1930s, confidence in the statist centralized economic planning models that had been popular in
10374-462: The company's current account), liquidity ratios might decrease. On the other hand, in a pure stock for stock transaction (financed from the issuance of new shares), the company might show lower profitability ratios (e.g. ROA). However, economic dilution must prevail towards accounting dilution when making the choice. The form of payment and financing options are tightly linked. If the buyer pays cash, there are three main financing options: M&A advice
10507-469: The company's share price and components on its balance sheet. The valuation methods described above represent ways to determine value of a company independently from how the market currently, or historically, has determined value based on the price of its outstanding securities. Most often value is expressed in a Letter of Opinion of Value (LOV) when the business is being valued informally. Formal valuation reports generally get more detailed and expensive as
10640-407: The condition , agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create
10773-420: The content analysis of seven interviews, the authors concluded the following components for their grounded model of acquisition: An increase in acquisitions in the global business environment requires enterprises to evaluate the key stake holders of acquisitions very carefully before implementation. It is imperative for the acquirer to understand this relationship and apply it to its advantage. Employee retention
10906-430: The control of the buyer modified. If the issuance of shares is necessary, shareholders of the acquiring company might prevent such capital increase at the general meeting of shareholders. The risk is removed with a cash transaction. Then, the balance sheet of the buyer will be modified and the decision maker should take into account the effects on the reported financial results. For example, in a pure cash deal (financed from
11039-461: The course of such commerce, to lease or make a sale or contract for sale of goods , wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on
11172-513: The court must ordinarily consider the facts peculiar to the business to which the restraint is applied, its condition before and after the restraint was imposed, the nature of the restraint, and its effect, actual or probable. Section 7 of the Clayton Act makes it illegal to execute a merger or acquisition if the effect "may be substantially to lessen competition, or to tend to create a monopoly." No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly,
11305-401: The courts to be so obviously detrimental that they are categorized as being automatically unlawful, or illegal per se . The simplest and central case of this is price fixing . This involves an agreement by businesses to set the price or consideration of a good or service which they buy or sell from others at a specific level. If the agreement is durable, the general term for these businesses
11438-411: The decisions of a single enterprise, or a single economic entity, even though the form of an entity may be two or more separate legal persons or companies. In Copperweld Corp. v. Independence Tube Corp. it was held an agreement between a parent company and a wholly owned subsidiary could not be subject to antitrust law, because the decision took place within a single economic entity. This reflects
11571-464: The defense sector are often subject to greater antitrust scrutiny from the Department of Justice and the Federal Trade Commission . The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of sections 1 to 7 of this title; and it shall be the duty of the several United States attorneys, in their respective districts, under the direction of
11704-454: The degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated. Some economists argue that antitrust laws actually impede competition, and may discourage businesses from pursuing activities that would be beneficial to society. One view suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while
11837-443: The discretion of the court. — Sherman Act 1890 §2 The law's treatment of monopolies is potentially the strongest in the field of antitrust law. Judicial remedies can force large organizations to be broken up, subject them to positive obligations , impose massive penalties, and/or sentence implicated employees to jail. Under Section 2 of the Sherman Act, every "person who shall monopolize, or attempt to monopolize ... any part of
11970-544: The early 1970s in the face of harsh criticism by economists and legal scholars from the University of Chicago . Scholars from the Chicago school of economics had long called for reducing price regulation and limiting barriers to entry . Newer Chicago economists like Aaron Director argued that there were economic efficiency explanations for some practices that had been condemned under the structuralist interpretation of
12103-504: The early 20th century as U.S. states passed laws that made it easier to create new corporations . In most other countries, antitrust law is now called " competition law " or "anti-monopoly law". American antitrust law formally began in 1890 with the U.S. Congress 's passage of the Sherman Antitrust Act , although a few U.S. states had passed local antitrust laws during the preceding year. Using broad and general terms,
12236-564: The early stages of the New Deal . The Supreme Court's decisions in antitrust cases during this period reflected these views, and the Court had a "largely tolerant" attitude toward collusion and cooperation between competitors. One prominent example was the 1918 decision Chicago Board of Trade v. United States , in which the Court ruled that a Chicago Board of Trade rule banning commodity brokers from buying or selling grain forwards after
12369-623: The early years of the New Deal era began to wane. At the urging of economists such as Frank Knight and Henry C. Simons , President Franklin D. Roosevelt 's economic advisors began persuading him that free market competition was the key to recovery from the Great Depression . Simons, in particular, argued for robust antitrust enforcement to “de-concentrate” American industries and promote competition. In response, Roosevelt appointed "trustbusting" lawyers like Thurman Arnold to serve in
12502-405: The efficiencies of large volume production. In addition, many of these mergers were capital-intensive. Due to high fixed costs, when demand fell, these newly merged companies had an incentive to maintain output and reduce prices. However more often than not mergers were "quick mergers". These "quick mergers" involved mergers of companies with unrelated technology and different management. As a result,
12635-468: The efficiency gains associated with mergers were not present. The new and bigger company would actually face higher costs than competitors because of these technological and managerial differences. Thus, the mergers were not done to see large efficiency gains, they were in fact done because that was the trend at the time. Companies which had specific fine products, like fine writing paper, earned their profits on high margin rather than volume and took no part in
12768-533: The games. That travel was merely incidental to a business which took place in each state. It was subsequently held in 1952 in Toolson v. New York Yankees , and then again in 1972 Flood v. Kuhn , that the baseball league's exemption was an "aberration". However Congress had accepted it, and favored it, so retroactively overruling the exemption was no longer a matter for the courts, but the legislature. In United States v. International Boxing Club of New York , it
12901-473: The global oil refinery industry. It is estimated that more than 1,800 of these firms disappeared into consolidations, many of which acquired substantial shares of the markets in which they operated. The vehicle used were so-called trusts . In 1900 the value of firms acquired in mergers was 20% of GDP . In 1990 the value was only 3% and from 1998 to 2000 it was around 10–11% of GDP. Companies such as DuPont , U.S. Steel , and General Electric that merged during
13034-491: The government settled, with the government dropping the case in return for Microsoft agreeing to cease many of the practices the government challenged. Every contract , combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of
13167-454: The greatest acclaim in recent years is its continuing to publish every day after downtown Clarksville and its printing plant received a direct hit from a powerful tornado in January 1999. In 1808, The Clarksville Chronicle newspaper started publication. However, no editions earlier than 1811 seem to be extant today. Later, The Tobacco Leaf appeared as a result of the area's reputation as
13300-424: The industry to sector specific regulation (frequently done, for example, in the cases water , education , energy or health care ). The law on public services and administration goes significantly beyond the realm of antitrust law's treatment of monopolies. When enterprises are not under public ownership, and where regulation does not foreclose the application of antitrust law, two requirements must be shown for
13433-475: The law does not seek to prohibit every kind of agreement that hinders freedom of contract , it developed a " rule of reason " where a practice might restrict trade in a way that is seen as positive or beneficial for consumers or society. Third, significant problems of proof and identification of wrongdoing arise where businesses make no overt contact, or simply share information, but appear to act in concert. Tacit collusion , particularly in concentrated markets with
13566-420: The law draws a "basic distinction between concerted and independent action". Multi-firm conduct tends to be seen as more likely than single-firm conduct to have an unambiguously negative effect and "is judged more sternly". Generally the law identifies four main categories of agreement. First, some agreements such as price fixing or sharing markets are automatically unlawful, or illegal per se . Second, because
13699-440: The long run by increased market share, broad customer base, and corporate strength of business. A strategic acquirer may also be willing to pay a premium offer to target firm in the outlook of the synergy value created after M&A process. The term "acqui-hire" is used to refer to acquisitions where the acquiring company seeks to obtain the target company's talent, rather than their products (which are often discontinued as part of
13832-549: The market's closing time (and then finalise the deals when it opened the next day). The reason for the Board of Trade having this rule was to ensure that all traders had an equal chance to trade at a transparent market price. It plainly restricted trading, but the Chicago Board of Trade argued this was beneficial. Justice Brandeis, giving judgment for a unanimous Supreme Court, held the rule to be pro-competitive, and comply with
13965-440: The merger. Mergers, asset purchases and equity purchases are each taxed differently, and the most beneficial structure for tax purposes is highly situation-dependent. Under the U.S. Internal Revenue Code , a forward triangular merger is taxed as if the target company sold its assets to the shell company and then liquidated, them whereas a reverse triangular merger is taxed as if the target company's shareholders sold their stock in
14098-481: The merger. Every person who shall monopolize , or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony , and, on conviction thereof, shall be punished by fine not exceeding $ 100,000,000 if a corporation, or, if any other person, $ 1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in
14231-409: The modern law governing monopolies and economic competition is known by its original name — "antitrust law". The term "antitrust" came from late 19th-century American industrialists ' practice of using trusts —legal arrangements where one is given ownership of property to hold solely for another's benefit—to consolidate separate companies into large conglomerates. These " corporate trusts " died out in
14364-413: The monopolization cases they brought under section 2 of the Sherman Act during this era. One of the government's few anti-monopoly victories was United States v. AT&T , which led to the breakup of Bell Telephone and its monopoly on U.S. telephone service in 1982. The general "trimming back" of antitrust law in the face of economic analysis also resulted in more permissive standards for mergers. In
14497-429: The most value from a business assessment, objectives should be clearly defined and the right resources should be chosen to conduct the assessment in the available timeframe. As synergy plays a large role in the valuation of acquisitions, it is paramount to get the value of synergies right; as briefly alluded to re DCF valuations. Synergies are different from the "sales price" valuation of the firm, as they will accrue to
14630-734: The newspaper consolidated its printing and production operations with its sister newspaper, The Tennessean in Nashville . Oppmann departed from both Gannett papers in late 2010. In 2023, the paper made a landmark hire, bringing on star sportswriter Jacob Shames from the Montgomery Advertiser . Merger Mergers and acquisitions ( M&A ) are business transactions in which the ownership of companies , business organizations , or their operating units are transferred to or consolidated with another company or business organization. This could happen through direct absorption,
14763-543: The offense of monopolization. First, the alleged monopolist must possess sufficient power in an accurately defined market for its products or services. Second, the monopolist must have used its power in a prohibited way. The categories of prohibited conduct are not closed, and are contested in theory. Historically they have been held to include exclusive dealing , price discrimination , refusing to supply an essential facility , product tying and predatory pricing . It shall be unlawful for any person engaged in commerce, in
14896-417: The offer. Hostile acquisitions can, and often do, ultimately become "friendly" as the acquirer secures endorsement of the transaction from the board of the acquiree company. This usually requires an improvement in the terms of the offer and/or through negotiation. "Acquisition" usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of
15029-446: The purchase price. These adjustments are subject to enforceability issues in certain situations. Alternatively, certain transactions use the 'locked box' approach, where the purchase price is fixed at signing and based on the seller's equity value at a pre-signing date and an interest charge. The assets of a business are pledged to two categories of stakeholders: equity owners and owners of the business' outstanding debt. The core value of
15162-446: The rewards for M&A activity were greater for consumer products companies than the average company. For the period 2000–2010, consumer products companies turned in an average annual TSR of 7.4%, while the average for all companies was 4.8%. Given that the cost of replacing an executive can run over 100% of his or her annual salary, any investment of time and energy in re-recruitment will likely pay for itself many times over if it helps
15295-458: The rule of reason. Judges increasingly accepted their ideas from the mid-1970s on, motivated in part by the United States' declining economic dominance amidst the 1973–1975 recession and rising competition from East Asian and European countries. The "pivotal event" in this shift was the Supreme Court's 1977 decision Continental Television, Inc. v. GTE Sylvania, Inc . In a decision that prominently cited Chicago school of economics scholarship,
15428-417: The rule of reason. It did not violate the Sherman Act §1. As he put it, Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question,
15561-471: The same time, however, the Court also held that although the Sherman Act prohibited "every" restraint of trade, it actually banned only those that were "unreasonable". It ruled that the Sherman Act was to be interpreted as a "rule of reason" under which the legality of most business practices would be evaluated on a case-by-case basis according to their effect on competition, with only the most egregious practices being illegal per se . Many observers thought
15694-448: The seller. Asset purchases are common in technology transactions in which the buyer is most interested in particular intellectual property but does not want to acquire liabilities or other contractual relationships. An asset purchase structure may also be used when the buyer wishes to buy a particular division or unit of a company that is not a separate legal entity. Divestitures present a variety of unique challenges, such as identifying
15827-442: The seller. With pure cash deals, there is no doubt on the real value of the bid (without considering an eventual earnout). The contingency of the share payment is indeed removed. Thus, a cash offer preempts competitors better than securities. Taxes are a second element to consider and should be evaluated with the counsel of competent tax and accounting advisers. Third, with a share deal the buyer's capital structure might be affected and
15960-414: The size of a company increases, but this is not always the case as the nature of the business and the industry it is operating in can influence the complexity of the valuation task. Objectively evaluating the historical and prospective performance of a business is a challenge faced by many. Generally, parties rely on independent third parties to conduct due diligence studies or business assessments. To yield
16093-490: The target company to the buyer. The documentation of an M&A transaction often begins with a letter of intent . The letter of intent generally does not bind the parties to commit to a transaction, but may bind the parties to confidentiality and exclusivity obligations so that the transaction can be considered through a due diligence process involving lawyers, accountants, tax advisors, and other professionals, as well as business people from both sides. After due diligence
16226-479: The theory of predatory pricing ). Antitrust laws do not apply to, or are modified in, several specific categories of enterprise (including sports, media, utilities, health care , insurance , banks , and financial markets ) and for several kinds of actor (such as employees or consumers taking collective action ). First, since the Clayton Act 1914 §6, there is no application of antitrust laws to agreements between employees to form or act in labor unions . This
16359-658: The topic brand architecture . Most histories of M&A begin in the late 19th century United States. However, mergers coincide historically with the existence of companies. In 1708, for example, the East India Company merged with an erstwhile competitor to restore its monopoly over the Indian trade. In 1784, the Italian Monte dei Paschi and Monte Pio banks were united as the Monti Reuniti. In 1821,
16492-426: The trade or commerce among the several States" commits an offence. The courts have interpreted this to mean that monopoly is not unlawful per se , but only if acquired through prohibited conduct. Historically, where the ability of judicial remedies to combat market power have ended, the legislature of states or the Federal government have still intervened by taking public ownership of an enterprise, or subjecting
16625-547: The transaction and going down into detail about what to do about overlapping and competing product brands. Decisions about what brand equity to write off are not inconsequential. And, given the ability for the right brand choices to drive preference and earn a price premium, the future success of a merger or acquisition depends on making wise brand choices. Brand decision-makers essentially can choose from four different approaches to dealing with naming issues, each with specific pros and cons: The factors influencing brand decisions in
16758-399: The trust will have ample advance warning and time in which to either buy the competitor out, or engage in its own research and return to predatory pricing long enough to force the competitor out of business. Critics argue that the empirical evidence shows that "predatory pricing" does not work in practice and is better defeated by a truly free market than by antitrust laws (see Criticism of
16891-441: The view that each business has a duty to act independently on the market, and so earn its profits solely by providing better priced and quality products than its competitors. The Sherman Act §1 prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." This targets two or more distinct enterprises acting together in a way that harms third parties. It does not capture
17024-474: The view that if the enterprise (as an economic entity) has not acquired a monopoly position, or has significant market power , then no harm is done. The same rationale has been extended to joint ventures , where corporate shareholders make a decision through a new company they form. In Texaco Inc. v. Dagher the Supreme Court held unanimously that a price set by a joint venture between Texaco and Shell Oil did not count as making an unlawful agreement. Thus
17157-406: The way in which they are financed and partly by the relative size of the companies. Various methods of financing an M&A deal exist: Payment by cash. Such transactions are usually termed acquisitions rather than mergers because the shareholders of the target company are removed from the picture and the target comes under the (indirect) control of the bidder's shareholders. Payment in the form of
17290-458: The whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create
17423-711: Was held that, unlike baseball, boxing was not exempt, and in Radovich v. National Football League (NFL) , professional football is generally subject to antitrust laws. As a result of the AFL-NFL merger , the National Football League was also given exemptions in exchange for certain conditions, such as not directly competing with college or high school football. However, the 2010 Supreme Court ruling in American Needle Inc. v. NFL characterised
17556-614: Was seen as the "Bill of Rights" for labor, as the Act laid down that the "labor of a human being is not a commodity or article of commerce". The purpose was to ensure that employees with unequal bargaining power were not prevented from combining in the same way that their employers could combine in corporations , subject to the restrictions on mergers that the Clayton Act set out. However, sufficiently autonomous workers, such as professional sports players have been held to fall within antitrust provisions. Second, professional sports leagues enjoy
17689-462: Was to keep prices low, not high. The court found that this was not true, but stated that not every "restraint of trade" in a literal sense could be unlawful. Just as under the common law, the restraint of trade had to be "unreasonable". In Chicago Board of Trade v. United States the Supreme Court found a "good" restraint of trade. The Chicago Board of Trade had a rule that commodities traders were not allowed to privately agree to sell or buy after
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