Corporate Valuation and Financial Strategy. Writing a Case Study

Transcription

1 FIN 673 Professor Robert B.H. Hauswald Corporate Valuation and Financial Strategy Kogod School of Business, AU Writing a Case Study The final group project consists of developing and writing a case study related to one or more themes of the course. The deliverables comprise the case itself together with its accompanying teaching note, the wrap-up presentation and your research materials in electronic form as a zip file containing analyst reports, SEC filings, company documents, press reports, etc. Submission of the case and its teaching materials should be both in hardcopy and electronic form (MS Word, Powerpoint and Excel files) by the deadline specified in the syllabus. In addition, you may have to present your case (depending on class size and course scheduling) to the class at which point you also submit the presentation in electronic and hardcopy format. Additional (optional) materials could consist of a Powerpoint presentation containing opposing perspectives on the case (essentially the assigned student roles), a note to the professor (synopsis and abstract of the case), data files for additional analysis, and case instructions for the students. Should you chose to include these optional items, you will be awarded bonus points. 1 Resources In order to help you in the development process and, in particular, with finding the right tone and expositional approach, you will receive two sample cases with teaching notes that are related to the themes of our class. They are both very different in terms of length, scope and analytic challenges and illustrate different aspects of case writing. Needless to say, you should not slavishly copy them but rather treat them as templates and a source of inspiration for both the phrasing of the issues and their exposition. As an additional resource, I posted several pieces (Case Writing.zip) on developing cases on our course website. Start with the Kashani (1995) piece to get into the right mindset and then focus on the excellent Schreyer Institute and Abell pieces. Abell (1997) is the most important article as it provides the criteria for grading the cases. The O Cinneide (1998) piece provides the typical workplan for case development but is somewhat idiosyncratic regarding the importance of the teaching note. Less crucial but still informative background reading are Bob Bruner s contributions on writing cases and how students should study and prepare for cases. They are full of insights and nicely set out what is required of a successful case study. The most important point to remember during the case writing process is the following: case studies are active learning experiences that require the students full involvement. Since they cannot be taught in a passive way they should be planned to give the students ample way to express opinions and analyze the decision question at hand. Last but not least, you have the cases we covered in class; they are course-specific examples of how to write cases and provide various opportunities for student analysis.

2 2 Focus and Themes Groups are responsible for picking their own cases. A good idea is to file away recent transactions and companies in the news to see whether they would fit into the course and offer sufficient scope for student analysis. The transaction or issue you are studying should lend itself to analysis and revolve around an actual business situation that calls for a decision. Imagine the various parties that might be involved, and it becomes easy to formulate a decision question the case revolves around. In general, it is a good idea to pick one particular perspective and then write the case from the point of view of that party. As in our case discussions during the course, your case is meant to illustrate and deepen the covered topics and should offer enough analytic material to become an integral part of the learning experience. It is in this sense that you are to provide examples of particular business situations to which reader can apply the concepts and analytical tools discussed in the lectures. All themes of the course are fair game but I suggest that you focus on the business applications of the more technical material we covered early on, i.e., you pick a case that is related to the second half of the course. However, the case should offer the reader sufficient scope to apply the techniques and financial tools that we developed in the first half of the course. Also, finance concepts and their economic roots (what are they? If you are not sure take a look at the lecture notes) are more than welcome: the case should also offer opportunities to revisit the fundamentals of finance and link them to financial solutions, transactions, deals, etc. 3 Requirements The article by Abell (1997), What Makes a Good Case? is an excellent starting point in your case development process as it lays out the requirements that a good case should satifies in 10 intuitive criteria. While the first two points are self-explanatory, several others are not. In particular, the fact that a case should provide opportunities for discovery merits attention. Put differently, the issues should not be self-evident so that there scope for problem solving and discovery of hidden truth. Translated to your task, this requirement means to avoid open and shut cases. In the same vein, it is important that the case lends itself to controversy, opposing points of view, etc. Indeed, I used this criterion to select cases for our class and assigned opposing and often conflicting perspectives to the various teams in my case instructions. Another important requirement is that the case illustrate fundamental concepts that admit generalizations to similar business situations (point 6); otherwise, it is not clear what insights, if any, are to be gained from a case study that does not have any universal message. Finally, you should take the expositional points to heart and make sure that the data requirements are adequately met. While Abell (1997) sets out criteria that define a good case, the Schreyer Institute Guidelines for Case Writing illustrate and explain the process of case development. 1 It more or less provides the blueprint for designing and writing cases and discusses the various stages and tasks that make up the development process. 1 Figure 1 in O Cinneide (1998) also details the various stages of the case writing process; following such a structured approach should facilitate your planning process. 2

3 4 Format The case deliverables consist of the case study itself and the teaching note, together making up around 25 pages. 2 You will not be penalized for exceeding this indicative overall length but be careful not to dilute your material. Put differently, I prefer a shorter and more concise case to one that needlessly stretches the material. To some degree, the optimal length depends on your research effort and how much material you are able to find. A good rule of thumb for the split between case and teaching note is 2/3 vs. 1/3 so that the indicative total length of 25 pages would call for a case of about 15 pages and a teaching note of 10 pages. Clearly, you need to make a presentational effort in terms of layout and writing: once again, the supplied case examples should suffice for inspiration and guidance. 3 By the preceding explanations, the case itself should be around 15 to 16 pages and more or less evenly split between the case itself and the analytic exhibits at the end. (e.g., 4 to 6 pages for the case itself, the balance in tables, figures, and other exhibits at the end). If you wish to exceed the page limit, the teaching note is a great place to do so: anything that makes it easier for the instructor to deliver the case obviously can but enhance your grade. Another good place to exceed the page limit are the exhibits in the case itself: the more scope for analysis you provide, the better the learning experience and, once again, the higher your reward. 4.1 Case Case and teaching note should be written together with the case itself describing the situation, laying out the decision problem, providing all necessary background information (as you know, often too much of it to distract students from the real issues), and containing the necessary input material for the analytic part in the form of figures and exhibits. The following is a typical case outline meant as an illustration (most cases follow this structure more or less). Obviously, the various subsections will have different case-specific titles but they usually cover the material which my labels refer to: 1. Present Situation 2. Background (a) Companies Involved (b) Industry (c) History 3. Transaction Details 4. Decision Issue(s) 5. Exhibits and Data for Analysis (input appendix at the end of the case) 2 Should your case offer opportunities for numerical or statistical analysis, you should include the requisite inputs and data as Excel files. The case and teaching note should be submitted in MS Word format so that they can easily be converted to HTML. 3 MS Word templates for the case and teaching note are available from the course website. 3

4 4.2 Teaching Note The teaching note accomplishes three tasks: it provides the (or rather one of many albeit a reasonable) solution to the case, a detailed class discussion outline with a classroom teaching plan, and an overview of the teaching objectives with discussion questions for students. A good split for a 5 to 6 page teaching note is 3 to 4 pages of explanations and the balance in Teaching Exhibits at the end. As I said earlier, the more you think about the pedagogical issues and delivery of the material, the higher typically the grade tends to be. Also, you might want to include as many Teaching Exhibits as you have time to come up with in case you feel you need to embellish your effort (or, even better, a Powerpoint presentation for the instructor). Here is a typical outline for a teaching note (also refer to the supplied examples): 4 1. Synopsis and Substantive Issues 2. Pedagogical Objectives 3. Scope for Student Analysis 4. Teaching Outline (detailed list of issues with short answers and pointers how to discuss them in class) 5. Suggested Questions for Student Discussion (4 to 6 detailed issues with corresponding questions) 6. Suggested Classroom Teaching Plan 7. Solution Exhibits (to be used by the instructor in the class room discussion) 4.3 Wrap-up Presentation The wrap-up presentation essentially reprises the teaching note and presents the (an) analytic solution to the case and would usually include the teaching note exhibits. A typical outline for this presentation is as follows: 1. Case Objectives and Presentation Summary 2. Situation Overview 3. Analysis and Solutions 4. Decision Time and Recommendations 5. Actual Outcome and Update 6. Generalizations 7. Summary and Lessons This presentation can also represent the basis for your final project presentation to the course; should the two differ you have to submit both versions. 4 Also see O Cinneide (1998) and, especially, his Figure 2 on the typical content and structure of teaching notes. 4

5 4.4 Optional Deliverables For bonus points, you can elect to submit additional case related items such as Powerpoint solutions to opposing views (easily developed on the basis of the teaching note), (detailed) case instructions for the students (ditto), a note to the instructor summarizing the case and highlighting the pedagogical objectives, data files for additional analysis, etc. 4.5 Layout and Formatting In order to insure a professional look and feel, I have developed MS Word templates for Kogod case studies and teaching notes that are available from the course website. The templates are largely self-explanatory and should be used for the final submission together with suitable title pages for grading. 5 You are more than welcome to develop a corresponding template for the Kogod Case Presentation in Powerpoint. 5 Writing While the process of developing a case study is referred to as writing a case the label is misleading: much more is involved. You start by looking out for interesting business situations (firms, transactions, decisions) that could fit the themes and topics of our class. Having focused on a couple of promising avenues, you next take an in-depth look at several potential candidates and search for materials. Third, you select your case subject, concluding the preliminary phase of your work. The second stage consists of three distinct tasks. First, you should write a preliminary outline of both the key issues and also the case itself that is to be turned in about a month before the case is due. I will provide feedback on your outlines and also suggest research and analytic avenues. 6 Second, you have to assemble the necessary information which normally involves a huge research effort. Good places to start are the websites of major players, especially the investor pages, analyst reports (call the major investment houses and see whether you can obtain relevant research materials), SEC filings (EDGAR: often the firms investor websites contain the filings in MS Word and Excel format that facilitates the writing process), Lexis/Nexis, electronic databases such as Dow-Jones Interactive, Yahoo!Finance that also has excellent downloadable data for firms that still exist, MSN Investor, etc. The internet has really revolutionized the search for company-specific material and you should take full advantage of its power. Third, you need to organize the material, parse the information and extract the relevant items that are most useful for your case. The third stage consists of writing the case and its teaching note. As part of this process you have to solve the case yourselves. Hence, the writing process is an interactive one where you go back and forth between teaching note and the case. Solving the case will also point to gaps in your analytic material and should inspire you to carry out further research. On the basis of the examples and these instructions, make sure that you allocate the material correctly between the case and the teaching note. Be careful not write a mixture of the two which would more closely correspond to case write-up which is NOT the objective of this exercise. Finally, you have to prepare your case presentations to the class. However, you are now presenting from the perspective of the instructor. Your wrap-up slides should lay out the agenda, learning objectives, analytic issues, sample solutions, generalizations, conclusions, update or outcome, and 5 Cases should be set in 12 point, Times New Roman, single-spaced, one-inch margins, and contain all the exhibits in appendices (titles in 12 point, exhibits in 10 points). The templates contain further formatting information. 6 Preliminary proposals are due six weeks before the final submission. 5

6 lessons. It is important that you make the case relevant to all parties involved through a true take away at the very end. An important part of designing and writing a case is identifying the important economic and financial issues, fundamental concepts, and analytic techniques. Make sure that, without giving the case away, the students have ample opportunity to use the financial techniques and concepts (not necessarily all, but the more, the better) discussed in our course. 6 Time Line The case study is to be completed by the date specified in the syllabus, typically around the university-allotted final exam date. Working backward from this date, I would suggest the following work plan: 1. Two months before submission: start looking for possible deals or issues that could form the basis of your case study; discuss possible topics with your group. Also, do some preliminary search for materials to see how far it will get you. 2. One month before submission: select a topic and write an outline with a detailed explanation of the issues involved and a work plan. 3. As specified in the syllabus: submit the case outline to obtain feedback during office hours. 4. Two weeks before final submission: come to office hours for a progress report and a detailed outline for the case and teaching note. 5. One week before final submission: submit a draft of the case and an outline for the teaching note. 6. As stated in the syllabus prior to the group presentations: project submission (all deliverables including research materials). Final project presentation materials are due at the very latest on the day of the scheduled class presentation in hardcopy and electronic form before the presentations take place. The syllabus contains the precise dates by which the milestones have to be met with specific interim deliverables so that I can provide feedback and help you in the development process. 7 Grading The case study will be graded as a whole, i.e., there will not be different grades for the case, teaching note and presentation. In terms of grading criteria, I intend to closely follow the ten quality factors for case studies set forth in Abell (1997). Hence, I will award points for the following categories (decreasing order of importance): 1. scope for analysis and application of technical concepts; 2. pedagogical interest and objectives; 3. presentation: clarity and quality of writing, prespective and personal touch, exhibits; 4. quality of research materials: primary sources and data; 6

7 5. originality: scope for insights, discovery, and surprises; 6. lessons and useful generalization. While I will respect to the overall weight of the final project announced in the syllabus, I will reward exceptional work and optional deliverables accordingly with bonus points. An important aspect of the grade is the look and feel of the case. Make sure that you do not invent facts and numbers and, if you need to estimate parameters, fully document your assumptions; there is a fine line between creativity and inventing facts. I will reward the former and severely punish the latter. Also, document in terms or sources the numbers that you provide in your Exhibits, quotes, substantive statements about the business situation, etc. When in doubt, err on the side of clearly attributing the information to its source. By and large, the same ground rules as for case preparation, presentation, and discussion during the course apply. The case should be written in groups (your usual work groups preferred) but the maximal group size is 4 and all group members receive the same grade. As before, late submissions will not be accepted for any reason. References [1] Abell, D. (1997), What makes a good Case? ECCHO: The Newsletter of European Case Clearing House 17: 4-7. Required reading. [2] Bruner, R. (2001), How to Study and Discuss Cases. Note to the Student, mimeo, University of Virginia. [3] Guidelines for Case Writing, mimeo, The Schreyer Institute for Innovation in Learning. Required reading. [4] Kashani, K. (1995), Living with a Case Study, ECCHO: The Newsletter of European Case Clearing House 11: [5] O Cinneide, B. (1998), Teaching Notes Should Be Front-Loaded, ECCHO: The Newsletter of European Case Clearing House 18: