This chapter covers 24% of the Series 79 exam (approximately 18 questions) and is the advisory side of investment-banking work: helping a client sell, buy, combine with, or restructure another company.
None of this material is in the SIE outline, so plan to spend more time here than the 24% weight suggests if you're new to deal advisory.
What You'll Learn
| Unit | Topic | Key Concepts |
|---|---|---|
| 1 | M&A Sell-Side Transactions | Engagement letter and process design (broad auction vs targeted auction vs negotiated sale), teaser and CIM, NDA and process letter, management presentations, IOIs and second-round bids, definitive agreement negotiation, board fiduciary backdrop |
| 2 | M&A Buy-Side Transactions | Acquirer strategy and capability assessment, acquisition rationale, anti-takeover defenses, tax considerations (stock vs asset deal, 338(h)(10) election, reverse / forward triangular merger), target analysis, valuation methods applied to the target, credit implications, competing-buyer assessment, bid development, financing arrangement |
| 3 | Fairness Opinions | When a fairness opinion is needed, the fairness committee and internal approval process, the financial analysis underlying the opinion, conflict disclosures, the opinion letter and proxy-statement disclosure |
| 4 | Signing to Closing | Definitive agreement signing mechanics, proxy statement and S-4 disclosure, closing conditions and bring-down, MAC/MAE clauses, deal-protection provisions (no-shop, fiduciary-out, matching rights, termination fees), external communications during the gap period |
| 5 | Tender Offer Regulations | The Williams Act framework, Schedule TO (bidder's disclosure), three tender-offer frameworks, Schedule 14D-9 (target's response) and stop-look-listen, timing mechanics (offering period, extensions, withdrawal rights, prompt payment), equal-treatment rules (best-price and all-holders), insider trading restrictions, proration / subsequent period / mini-tenders |
| 6 | Financial Restructuring & Bankruptcy | Capital-structure waterfall, credit agreements vs indentures, financial covenants, events of default and early refinancing, the Chapter 11 process and players, DIP financing, plan of reorganization and confirmation, prepacks and prearranged plans, 363 sales, out-of-court restructuring and plan securities |
Why This Chapter Matters
This is where the analytical work from Chapter 1 gets applied to the highest-stakes mandates a banker handles. A sell-side process can run six months and result in a single auction outcome; a hostile tender offer plays out under tight Williams Act timeline rules with one shot at the right disclosures; a Chapter 11 restructuring touches every layer of the capital structure and gets confirmed by a court.
The exam tests whether you can recognize what process stage a deal is in, name the right document for a given disclosure obligation, walk through tender-offer timing thresholds without checking a chart, and understand which restructuring path (out-of-court vs prepack vs traditional Chapter 11) fits a given capital-structure situation.
Exam Strategy
At 24% of the exam (18 questions), this chapter is recall-heavy on process and document-content lists, and judgment-heavy on M&A scenarios. Focus on:
- Sell-side vs buy-side process steps: who creates what document (teaser, NDA, CIM, IOI, LOI, definitive agreement), when each gets distributed, who at the target / acquirer / advisor signs off
- Williams Act tender-offer timeline: minimum offering period, extension requirements when terms change, withdrawal rights window, prompt payment after expiration, mini-tender carve-outs
- Schedule TO vs Schedule 14D-9: who files which, content requirements, the target's stop-look-listen window before recommending accept / reject / neutral
- Deal-protection mechanics: no-shop with fiduciary-out, matching rights, three-tier termination fees (typical seller breakup fee vs reverse termination fee), specific performance vs damages remedies
- MAC / MAE clauses: typical carve-outs (industry-wide, force majeure, deal-announcement effects), what disproportionate-effect language does, how courts have interpreted MAEs
- Capital-structure waterfall: who gets paid in what order (senior secured -> senior unsecured -> subordinated -> equity), what makes a debt instrument the fulcrum security, why the fulcrum tends to receive the new equity in a restructuring
- Chapter 11 fundamentals: DIP financing priming, plan of reorganization confirmation requirements (impaired-class voting, best-interests test, cramdown), absolute priority rule and equitable subordination, 363 sale mechanics, out-of-court exchange-offer alternatives
- Fairness opinion scope: what the opinion covers ("fairness from a financial point of view"), what it doesn't cover (legal, tax, structural), conflicts disclosure, the proxy-statement requirement to include the opinion and a summary of the analysis