FIN3470 Small Business Finance Course Outline Jan-Apr 2013

Transcription

1 The University of Manitoba I.H. Asper School of Business Course Outline FIN3470 Small Business Finance January April 2013 Professor Telephone Dr. Zhenyu Wu Time Location Office A01: 16:00-17:15 Mondays and Wednesdays 140 Drake 416 Drake Prerequisites Office Hours Use for Questions 13:30 14:30 Please use FIN3470 as FIN 2200 and ACC 1100 Mondays and Wednesdays the subject This course on small business finance covers both the investment and the financing decisions the decision to launch or invest in a small business and how a small firm may be financed. In theory and practice, both ultimately depend critically on valuation of the small business. Among various types of small businesses, we focus more on new ventures. There has been dramatic creation of value through small businesses, especially new ventures. Private equity has become a large part of the capital market because regulatory changes have enabled the involvement of institutional investors. Parallel to this, academic research on small business finance has made good use of tools from mainstream finance and economics. As a result, we now have scientifically established principles and theoretical explanations for many of the practices and rules of thumb used to finance small firms, especially new ventures. I have adopted an approach balanced between the theoretical and practical following which I hope you will gain a more systematic understanding about the special problems related to launching and financing a small firm/new venture. Seeing how financial principles are applied to valuing and financing small firms/new ventures will, hopefully, deepen your understanding of financial theory. I have planned the following activities for the course: readings, lectures, case studies, forecasting and valuation problems, and a final case exam. Readings on the practical side are all from a package prepared by the Harvard Business School. With respect to the theory section of the course, you will most likely have to rely heavily on my lectures and lecture notes, as well as the articles/notes included in the package required for this course. The exercises are designed to further develop your confidence and skill in financial analysis while the case studies will require you to apply judgment in addition to analysis. 1

2 Tentative Course Schedule Date Topic Readings Part 1. Theory of Small Business/New Venture Finance Jan 7 Jan 9 Jan 14 and 16 Jan 21 and 23 Jan 28, Feb 4 and 6 Feb 11 and 13 Introduction Review of Corporate Finance Topics Video: Small and Medium-Sized Enterprises Financial Forecasting - Theory and Examples Theory of Small Business/New Venture Finance Video: Boom and Bust in Private Equity Case 1: NetFlix.com, Inc. Case 2: Car Wash Partners Case 3: Neverfail Computing Your FIN2200 Textbook Reading Materials for Part I in the Package No lecture; Students are strongly encouraged to attend: (1) A guest lecture on Intellectual Property will be Jan 30 held on Feb 4 14:30-15:45; and/or (2) A guest lecture on Canadian Innovation Commercialization Program will be held on March 13 14:30-15:45 Quiz I: Small Business/New Venture Financing Theory and Feb 25 and 27 Financial Forecasting Part 2. Basic Analytic Skills and Applications/Decision Making Mar 4 and 6 Mar 11 Mar 13 Mar 18 and 20 Mar 25 and 27 Mechanics of Valuation Review of Financing Theories Structuring the Financing Deal Small Business/New Venture Valuation Problems Case 4: Internet Securities, Inc.: Financing Growth Case 5: Endeca Technologies (A) Case 6: Zoots (A) Your FIN2200 Textbook Reading Materials for Part II in the Package Apr 1 and 3 Apr 8 and 10 Quiz II: Valuation, Financing Deal and Small Business/New Venture Financing Analytic Skills No lectures; students are strongly encouraged to attend the business plan competition of ENTR4100 2

3 Required Package for Cases and Reading Materials from Harvard Business School A package of cases and reading materials prepared by the Harvard Business School is required for this course. It can be purchased and accessed online using the following link: One more case for the final case exam will be added to the package later in the semester. The 12 items are organized as the following: Reading Materials for Part I: Introduction to Entrepreneurial Finance: by Paul A. Gompers Angels and Venture Capitalists: For Serious Outside Equity: by HBS Press New Venture Financing: by Howard H. Stevenson and Michael J. Roberts Reading Materials for Part II: Note on Valuation of Venture Capital Deals: by Thomas Hellmann Deal Structure and Deal Terms: by Michael J. Roberts and Howard H. Stevenson Note on Financial Contracting: "Deals": by William A. Sahlman Cases: NetFlix.com, Inc.: by E. Scott Mayfield Car Wash Partners, Inc.: by Paul A. Gompers Neverfail Computing: by Dan D Heilly, Kevin Ebel, and William D. Bygrave Internet Securities, Inc.: Financing Growth: by Walter Kuemmerle and Chad Ellis Endeca Technologies (A): by Felda Hardymon, Josh Lerner, and Ann Leamon Zoots (A): by Michael J. Roberts, William A Sahlman, and Todd Krasnow Teams 12 Teams will be formed. Each team must work together on group-based assessments through the whole semester. At the end of the semester, each member in a team will be required to evaluate the other members contribution, and grades assigned to each team will take the peer evaluation into account. Assessment Tasks Case Study 20% 10% each, team Work 2 Quizzes 40% 20% each, individual work Class Participation 10% Individual Final Case Exam 30% Team work 3

4 Case Studies: Two 25-minute regular case presentations will be made by each student team. Quizzes There will be TWO quizzes worth 20% each. Both of them are individual work, and will be based on relevant lectures. Each of them has two components, essays and calculations. Everybody must write the quizzes on the scheduled dates, except for medical reasons which must be accompanied by a Medical Absenteeism Form signed by the student and the attending physician. The Medical Absenteeism Form is attached at the end of this syllabus. If a student misses a quiz for medical reasons, the 20% for it will be reallocated to the other quiz so that the other one will be worth 40% of his/her final grade. Class Participation Class participation grade is received through class presentations, inquiring questions, insightful comments, sharing of relevant experience, and class attendance. Quality is more important than quantity. Final Case Exam The final case exam will be a take-home exam, and it requires team work. The case and the detailed instructions will be provided by the professor at the end of the term. Reports are required to be submitted to the professor via (Zhenyu_wu@umanitoba.ca) BEFORE or AT 5pm Friday April 19, No late submissions will be accepted. 4

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