BSc International Business, Finance and Economics with Industrial/Professional Experience

Year of entry: 2020

Course unit details:
Mergers & Acquisitions: Financial Perspectives

Unit code BMAN24102
Credit rating 10
Unit level Level 2
Teaching period(s) Semester 2
Offered by Alliance Manchester Business School
Available as a free choice unit? No

Overview

Corporate finance theory suggests that Mergers and Acquisitions (M&A) and other corporate restructuring activities can serve as an effective strategic tool for companies to respond to changes in the economic environment, and thus create value for their stockholders.

This course deals with mergers, acquisitions, and other restructuring activities such as leveraged buy-outs, spin-offs, carve-outs, and divestitures in an international context. The course concentrates on the motives for takeovers and restructuring, the valuation of firms involved in takeovers, and the practical aspects of the different stages of the takeover process (target selection, valuation, deal design, and post-merger integration).

Throughout the course the shareholder wealth effects of the different decisions associated with corporate restructuring transactions is emphasised. The course takes a financial rather than a strategic perspective on M&A deals.

The course is applied rather than theoretical in nature. It builds on concepts that should be familiar to students from introductory core courses, such as cost of capital and Net Present Value, and applies them to specific cases of corporate restructuring. The course uses lots of examples of real-world corporate restructuring cases.

Pre/co-requisites

Unit title Unit code Requirement type Description
Financial Decision Making BMAN10522 Pre-Requisite Compulsory
Fundamentals of Finance BMAN10552 Pre-Requisite Compulsory
Foundations of Finance A BMAN23000 Co-Requisite Compulsory
Financial Decision Making M BMAN10522M Pre-Requisite Compulsory
Foundations of Finance B BMAN23000B Co-Requisite Compulsory
BMAN24102 has pre-requisites of BMAN10522/10522 (M) or BMAN10552. (BMAN10552 must be passed at 60% or more). BMAN23000 (A) or (B) is the co-requsities. Available to BSc Accounting, IBFE and BA Econ.

Pre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline.

 

Aims

This course aims to provide students with the necessary knowledge and skills to (i) evaluate proposed corporate restructuring deals and their design, (ii) suggest appropriate corporate restructuring transactions to companies, and (iii) predict the expected stock price reactions to corporate restructuring announcements.

Learning outcomes

Upon successful completion of this course, students will be able to:

Knowledge and understanding; intellectual skills

•      Confidently use typical M&A-related terminology (e.g., tender, poison pill, private equity,…);

•      Understand the motives for various corporate restructuring activities, and realize that M&A might not be the best corporate restructuring alternative for all firms;

•      Understand the determinants of M&A waves (hot and cold markets);

•      Predict the shareholder wealth effects of various corporate restructuring activities;

•      Understand the determinants and shareholder wealth effects of M&A deal design aspects (e.g. financing with stock vs. cash, takeover defences);

Practical skills

•      Apply basic valuation techniques for stand-alone companies and synergies;

•      Form and defend an opinion on whether a particular (recent) M&A deal "makes sense", and what criteria should be used for such judgment;

•      Critically evaluate research related to corporate restructuring;

•      Put themselves in the role of M&A process participants (e.g., consultants, company CEOs) and evaluate M&A proposals from these different angles.

Syllabus

Content of Lectures

•      Main vocabulary associated with M&A

•      Shareholder wealth effects of M&A announcements

•      Determinants of hot and cold M&A markets

•      Alternative corporate restructuring transactions (carve-outs, spin-offs, LBOs, divestitures) and their shareholder wealth effects

•      Company and synergy valuation methods

•      M&A deal characteristics and their shareholder wealth effects

•      Post-merger integration

•      In-depth discussion of one academic article related to corporate restructuring

•      In-depth discussion of one case study related to corporate restructuring

The course will conclude with a revision session during which we will discuss examples of multiple choice and essay type exam questions.

Teaching and learning methods

This course is delivered through 11 two-hour lectures. Lectures are highly interactive in nature and expect active preparation and input from students.

Total study hours: 100 hours split between lectures, classes, self study and preparation for classes, coursework and examinations.

Employability skills

Other
This course is useful for students who are interested in a career in investment banking, consulting, or private equity. It is also very useful for students who aspire to become major decision makers within companies (e.g. Chief Financial Officers). The course takes a broad rather than a narrow focus on M&A and corporate restructuring. As a result, upon completion of this course students should be well-equipped to take entry-level interviews for M&A-related roles at major banks and consulting firms.

Assessment methods

Formative assessment: Weekly multiple choice and essay questions on Blackboard testing students’ understanding of the concepts covered in class. Students should post their answers to these questions on TurnitIn each week prior to the next lecture. They will then obtain general feedback on their performance (e.g. an overview of the most common errors and suggestions for improvement) at the start of the next lecture. These weekly assignments will help students to actively engage with the material, revise the material on a weekly basis rather than towards the end of the course, and get quick feedback on their level of understanding.Summative assessment:Examination: 2 hours (100% of the mark). The exam consists of 20 multiple choice questions (counting for 60% of the mark) and 2 open questions (counting for 40% of the mark), to be chosen from a total of three open questions. 

 

 

Feedback methods

Students can obtain feedback through various channels.

• During lectures as these will be highly interactive. Students are strongly encouraged to actively participate. Several examples of potential exam questions will also discussed during lectures.

• Discussion Boards in Blackboard on which students can post any question related to the course.

• Responses to student questions via email

• Weekly quizzes posted on Blackboard to test students understanding of the key concepts discussed in class.

• Generic feedback posted on Blackboard regarding overall examination performance.

Recommended reading

Main Textbook: Takeovers, Restructuring, and Corporate Governance (Weston et al, 4th International edition, Pearson, 2003.

In addition: Assigned readings (recent academic and business press articles and a case study).

Students are expected to prepare the assigned readings prior to each lecture, so that they are in a position to actively participate to these class events.

 


 

Study hours

Scheduled activity hours
Lectures 22
Independent study hours
Independent study 78

Teaching staff

Staff member Role
Paul Simpson Unit coordinator

Additional notes

Pre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated below.

Pre-requisites: BMAN10522/10522 (M) Financial Decision Making or BMAN10552 Fundamentals of Finance. (BMAN10552 Fundamentals of Finance must be passed at 60% or more).

Co-requisites: BMAN23000(A)(B) Foundations of Finance

Dependent course units: None

Programme Restrictions: , BSc Accounting, BSc International Business, Finance and Economics, BA Econ Accounting and Finance, BA Econ Finance, BA (Econ) Economics and Finance, BEconSc.

BMAN24102 is available to study abroad and exchange students admitted through the University of Manchester International  Programmes Office

Timetable
https://ughandbook.portals.mbs.ac.uk/Myprogramme/Teachingtimetables.aspx

For Academic Year 2019/20

Updated: May 2019

Approved by: March UG Committee

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