X MANAGEMENT (4 UNITS) Merger & Acquisitions (Online)

Transcription

1 Page 1 Course Description & Pre-requisite: X MANAGEMENT (4 UNITS) Merger & Acquisitions (Online) This course is intended primarily for individual investors looking to acquire a small to midsized business, or corporate executives and professionals looking to expand their company's prospects via merger and acquisitions. This course combines analytical framework with real-world applications to introduce the key processes and the techniques involving business combinations. Topics include current trends in M&A, accounting foundations, legal constraints, tax implications, business valuation techniques, M&A risk management, etc. The student will learn to prepare, evaluate and execute business mergers and acquisitions through lectures, discussion forums, cases studies, M&A in actions, and assigned practice questions, Students leave the course with an understanding of how to put together a deal, how to minimize overpaying, and how to increase their chances of success in a business combination. Pre-requisite: X 130 Basic Managerial Finance or equivalent or the consent of the instructor. Course Objectives By the end of this course, a successful learner should be able to: 1. Assess which acquisition methodologies are applicable based on the type of company being valued. 2. Prepare a basic acquisition valuation using various appropriate valuation methodologies discussed in the course. 3. Specific learning objectives: Methods of business M&A. Different standards for business acquisitions. The different types of discounts and premiums that can be applied to value a business, and when they are appropriate. The effect of subsequent events on an acquisition valuation. Choice of entity and its effect on valuation. Comparative financial statement analysis and quality of earning. Reference Textbook (Highly Recommended): Valuation: Measuring and Managing the Value of Companies. Publisher: McKinsey & Company Inc. Authors: Koller, Goedhart, Wessels. University Edition, 5th Edition. Required Reading Materials: 1). Business Acquisitions Course Reader: this will be uploaded to on a weekly basis.

2 Page 2 2). Harvard Case Studies: Please order the cases from Harvard website listed below. Please note that you can choose to order all the cases (for learning purpose) or just the one for your in-depth research. Option #1: ENG&referral=00103 Option #2: Case 1: HBS Note on Corporate Strategy. Case 2: HBS Cash Flow and the Time Value of Money Case 3: UV1056-PDF-ENG Bidding for Hertz: Leveraged Buyout Case 4: HBS Between a Rock and a Hard Place: Valuation and Distribution in Private Equity. Case 5: HBS : Valuing a Business Acquisition Opportunity Case 6: HBS Corporate Valuation and Market Multiples. Case 7: HBS M&A Legal Context: Basic Framework for Corporate Governance Case 8: HBS # : Cisco Systems: Acquisition Integration for Manufacturing (Part A) Case 9: Prod. #: : Accounting for Business Combinations: Acquisition Method. Case 10: Prod. #: 908N11: Cequel Energy, Inc.: Increasing Shareholder Value. Other Reference Books (recommended but not required) White, Sohndi and Fried: The Analysis of and Use of Financial Statements, Wiley. Benjamin Graham: Security Analysis Calculator or MS-Excel Requirements You need to have a financial calculator by the second week. You can use any financial calculator as long as it has all the functions we use in class, including PV, FV, cash flow

3 Page 3 calculations (models: HP10B, HP 12C, HP 17B, TI BA II, etc.). Alternatively, you need to have access to a PC with MS-Excel spreadsheet applications. Class Expectations Class participation is important and can favorably affect your grade. Minimum acceptable participation is regular participations in online discussions and completion of the specific assignments, including the midterm and final exams. Selected problems will be assigned each week. Course Procedure You will have assigned reading to be done prior to each class. Between classes you will practice on the selected assignments and questions. You will also be expected to complete the midterm & the final exams as well as the research project. Course Evaluations & Grading Policy The Exam will be combinations of multiple choice and essay questions and problems. Exam / Participation / Individual Weight Grade Tentative Range Research Project / Harvard Cases Online Discussion Forum (Weekly) 15% A 92 or above Harvard Case Studies (one case) 25% A M&A Research Project 25% B Final Exam (Comprehensive) 35% B Total 100% B C C C D / F 55 65; Below 55 Teaching Style Lectures, discussion, case studies, problem solving, homework, and individual project. Incompletes: The interim grade Incomplete may be assigned when a student's work is of passing quality, but a small portion of the course requirements is incomplete for good cause (e.g. illness or other serious problem). It is the student s responsibility to discuss with the instructor the possibility of receiving an I grade as opposed to a non-passing grade. The student is entitled to replace this grade by a passing grade and to receive unit credit provided they complete the remaining coursework satisfactorily, under the supervision of and in a time frame determined by the instructor in charge, but in no case later than the end of the next academic quarter. At that time, the Registrar will cause all remaining Incompletes to lapse to the grade "F". Note: Receiving an I does not entitle a student to retake all or any part of the course at a later date. Student Behavior involving cheating, copying other s work, and plagiarism is not tolerated and will result in disciplinary action. Students are responsible for being familiar with the information on Student Conduct in the General Information Section of the UCLA Extension Catalog or on the website at

4 Page 4 Course Outline & Reading Assignments Topic Readings Week 1 Introduction to Business Acquisition See reading materials on Week 2 Rationales for Business Acquisitions A. Rationales for Business M&A B. M&A Fundamental Process HBS Note on Corporate Strategy. HBS 908-N11 Cequel Energy, Inc.: Increasing Shareholder Value. Additional reading materials on the website. Week 3 Time Value of Money; LBOs and Private Equity HBS Cash Flow and the Time Value of Money UV1056-PDF-ENG Bidding for Hertz: Leveraged Buyout HBS Between a Rock and a Hard Place: Valuation and Distribution in Private Equity Additional reading materials on the website Week 4 Valuing Business Acquisitions (Part 1): An Overview HBS : Valuing a Business Acquisition Opportunity HBS Corporate Valuation and Market Multiples. Additional reading materials on the website Week 5 Valuing Business Acquisitions (Part 2): ; Accounting & Legal Issues Mid-term Assessment Test ( Learn by Examples ) HBS Accounting for Business Combinations: Acquisition Method. Arlette Wilson: Revised Accounting For Business Combinations. Deloitte Accounting for Business Combinations and Related Topics. HBS M&A Legal Context: Basic Framework for Corporate Governance. Additional materials on the website. Week 6 Non-Disclosure Agreement (NDA) & Due Diligence Reading materials on Week 7 Acquisition Financing Reading materials on Week 8 Documentation & Stock Purchase Agreement Reading materials on

5 Page 5 Week 9 Business Integration: HBS # : Cisco Systems: Acquisition Integration for Manufacturing (Part A) Reading materials on the website Week 10 Supplementary Reading Materials Final Take-home Exam Please send your final exam and the Harvard case / Research Project as a single package Supplementary Reading Materials (1): McKinsey Valuation Methods & Techniques Supplementary Reading Materials (2): McKinsey Advanced Valuation Issues All above Reading materials on the website Harvard Business Cases Each student is required to choose one case for deep-dive analysis. You are encouraged to form a small project team (with 2-4 participants) to facilitate the network opportunities. Alternatively, you can choose to work on the Harvard case independently. You can choose any case from the list that meets your personal & professional interests. Harvard case study is more like "position paper". You would review the literature (the case), list out the different options / approaches / alternatives, discuss & assess the strengths and weaknesses of each alternative, and then select your own approach / make a recommendation. The course website contains a sample case write-up on "Pine Street Capital" for your reference. Note that the emphases are on: Developing business, analytical and judgment skills. Gain exposures to dynamic organizational and managerial situations. Enhance your skills to analyze and defend your opinion as new information or perspectives become available. Incorporate computer modeling techniques (e.g. Macro, what-if analysis, business charting) and Excel spreadsheets where appropriate. What to Expect in a Case: Critical issues are not explicit. Information may be incomplete or ambiguous. Some information may be redundant / irrelevant. There are no correct or wrong answers as long as you can justify / substantiate your positions. Sample Guidance ( Citibank Capital Arbitrage for demo purpose):

6 Page 6 Provide a business report (about 10 pages, including cover page, Table of Contents, Reference; graduate school-level quality) that includes: Overview: the issues / business case; the parties involved. Proposed solutions: Strength analysis. Proposed solutions: Potential risks involved in this credit derivative deal. Critique / evaluate on the proposed talk points to clients. Develop a set of recommendations supported by your analysis. Evaluate alternative proposals (pros and cons). Address the implementation issues in an applied corporate setting. Provide some analysis of the bond features in Exhibit 1, e.g. coupon frequency, discount vs. premium bond, etc. Concluding remarks; Reference.