- Wayne Adiam
- Investment Banking (c)
- Real Estate (r)
This is a core course for the Investment Banking major. More generally, the course should be useful to any student interested in investment banking, private equity, funds management, consulting, corporate development, entrepreneurship, accounting and control, business journalism, general management, and advising senior management.
A 2-hour class each week of the course. Classes mix in-depth case discussions, mini-lectures, hands-on financial analysis, and guest speakers. One class is devoted to project presentations. The case discussions depend on student preparation and active participation in class.
The course objectives are to provide an understanding of the drivers of value creation and destruction in mergers and acquisitions (M&A) and to develop skills in the design and evaluation of these transactions. Familiarity with M&A is a foundation for effective work in a wide range of fields including investment banking, private equity, consulting, corporate development, and advising senior management.
The focus of the course will be primarily to analyze M&A from the perspective of a financial advisor, integrating issues from economics, accounting, law, strategy and organizational behavior where appropriate. Successful financial advisors not only evaluate individual transactions, but also offer guidance on trends in capital markets. Accordingly, we will examine past and current trends in capital markets, the motivations and comparative advantage of different players in these markets such as private equity firms, and factors that can influence capital market trends. In addition, the course will bring in the perspectives on M&A deals of other key players, namely stock market participants, regulators, corporate insiders, shareholders, creditors, and other stakeholders.
The class sequence roughly follows the timeline of a deal and related undertakings. We start with the review of the current state of the M&A market and recent trends, followed by a discussion of the role of takeovers in corporate finance and corporate governance. We then move on to the analysis of value creation in M&A and apply standard and M&A-specific valuation tools to evaluate acquisition deals and the associated synergies. This is followed by a discussion of how M&A strategies interact with firms’ financing policies and how payment methods are chosen. We will also discuss various differences between financial buyers (leveraged buyouts) and strategic (trade) buyers. Moving on to deal structuring, we will discuss contractual features of merger agreements and legal aspects of M&A deals. We will then address the more specialized issues such as the role of stock market and antitrust regulation, merger arbitrage, and post-merger integration. Finally, we will explore organizational restructuring (break-ups, spin offs, split offs, carve-outs) as well as financial restructuring/distress situations in the context of M&A deals. You will then integrate all of the above in a deal concept assignment.
Evaluation and Grade Distribution
|Case Write-Ups (group)||Ongoing||15%|
|Deal Concept Assignment (group)||Final 2 Weeks||25%|
|Final Exam/Test||Exam Week/In-Class||40%|
A course pack of case studies, supplementary readings, and articles.
As background reading, the following textbook is also recommended: J. Rosenbaum and J. Pearl, Investment Banking: Valuation, Leveraged Buyouts and Mergers & Acquisitions, 2nd edition, Wiley, 2013