June 24, 2011
Corporate Finance Roundtable: Teaching Mergers and Acquisitions
Posted by joanheminway

Among the conundra that we business law teachers face is where, when, and how to teach M&A.  A number of my students go on to work in M&A with small local and medium-sized regional firms.  They typically do private-private deals.  Of course, I cut my lawyering teeth on much larger transactions, so teaching the subject to this audience meant refocusing more than a bit . . . .

Most law students at Tennessee do not go further than the basic Business Associations course.  Yet, many of them will later need to know something about M&A.  So, I do spend a few hours talking about the basic M&A structures and the overlay of securities regulation in covering the larger issues of fundamental corporate change transactions and change-of-control transactions.  But there needs to be more somewhere, in my view.  I do another few hours on M&A structures in Corporate Finance, for the few folks that take the course.  But, given the fact that we do not have resources to teach a full M&A course in addition to our Corporate Finance offering, the main place I get to teach M&A in a skills-based context is through our transaction simulation course, Representing Enterprises.  There, I can teach a 14-hour module focused on M&A in a practice context.  What I teach in the module has varied from year to year, but it gets much more granular and always focuses around transaction documents.

As I earlier noted, one area of focus, once I figured out the basic subject matter that I wanted to teach, was finding the right book.  I always employ PowerPoint slides that I created for my own use in going over the different deal structures.  But I keep yearning for a non-casebook (or two short non-casebooks) that explains M&A structures and connects them to the statutory law, and also, at the same time, walks through the components of a business combination agreement and unpacks the legal and practical issues--all in a digestible, yet rigorous, way.  I have coauthored a series of annotated M&A agreements for our business law journal over the years (all of which are available through my author page on SSRN), and I sometimes assign one or more of those. In addition, I use excerpts from Jim Freund's Anatomy of a Merger where I can, but it is quite dated now on a number of issues and cannot be assigned in its entirety as a text.  It is also frightfully expensive to buy when one can find a copy.

In the hopes that I could find part of my solution, I picked up Ken Adams's new book, The Structure of M&A Contracts, available for download in .pdf.  The first thing I noticed was its abbreviated length--94 pages of primary text, all in (110 pages cover-to-cover).  The book addresses the structure of M&A agreements and related drafting issues and not much more.  So this is not the soup-to-nuts teaching resource I am looking for, but it may well serve as a component piece of the M&A teaching materials puzzle.  I plan to "give it a go," as a supplement to other resources, my next time teaching this module.  Here are some things that I like about the book, apart from its short length:

  • It is written in a very accessible, user-friendly style.
  • It includes a series of helpful charts showing, e.g., linkages between and among the different component provisions in an M&A agreement and where in the agreement one would address various client issues.
  • Where relevant, it cites to the 2009 Private Target Deal Points Study from the Mergers & Acquisitions Market Trends Subcommittee of the Committee on Mergers and Acquisitions of the ABA Section of Business Law, a resource on transactional norms with which business law students should become familiar.  Ken also cites to Jim Freund and to two other former Skadden colleagues, Lou Kling and  Eileen Nugent (whom I respect and also cite in my work), as well as further important resources for M&A drafters.
  • Those who have read and appreciate A Manual of Style for Contract Drafting (like me) also will appreciate this book.  It is written in a similar format and makes many of the same points.  (FYI, I do not always agree with Ken's judgments, but I always appreciate them.  And where we disagree, the basis of the disagreement usually is an excellent basis for class discussion.)
  • The book makes a valuable point up front--which I also make (in a different way using stronger language) in class: "A note to junior lawyers: before embracing the more novel recommendations made in this book, you should consider getting the approval of someone more senior." 
  • The cost of the book is $25, and it will be useful well beyond law school for those with business law practices (which include most of the students in my course).

Do you all teach M&A in your Corporate Finance courses?  As a stand-alone?  And do you all cover M&A at some level in your Business Associations or Corporations course?  What materials do you use?  Comments are invited.

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