The John M. Olin Center

Paper Abstract

781. John C. Coates IV, Mergers, Acquisitions and Restructuring: Types, Regulation, and Patterns of Practice, 07/2014; forthcoming in Oxford Handbook on Corporate Law and Governance.

Abstract: An important component of corporate governance is the regulation of significant transactions – mergers, acquisitions, and restructuring.  This paper (a chapter in Oxford Handbook on Corporate Law and Governance, forthcoming) reviews how M&A and restructuring are regulated by corporate and securities law, listing standards, antitrust and foreign investment law, and industry-specific regulation.  Drawing on real-world examples from the world’s two largest M&A markets (the US and the UK) and a representative developing nation (India), major types of M&A transactions are reviewed, and six goals of M&A regulation are summarized – to (1) clarify authority, (2) reduce costs, (3) constrain conflicts of interest, (4) protect dispersed owners, (5) deter looting, asset-stripping and excessive leverage, and (6) cope with side effects.  Modes of regulation either (a) facilitate M&A – collective action and call-right statutes – or (b) constrain M&A – disclosure laws, approval requirements, augmented duties, fairness requirements, regulation of terms, process and deal-related debt, and bans or structural limits.  The paper synthesizes empirical research on types of transactions chosen, effects of law on M&A, and effects of M&A.  Throughout, similarities and differences across transaction types and countries are noted.  The paper concludes with observations about what these variations imply and how law affects economic activity.

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