FIN 640: Corporate Finance II (Mergers, Acquisitions and Divestitures)
Contents
The topic of this course is the restructuring of corporations through mergers, acquisitions and divestitures. The purpose of the lecture is to provide an understanding of restructuring processes and to provide an analytic framework to analyze the motivation of these activities and their individual merits. A special focus will be on the economic analysis of corporate strategy and the contractual structures of various types of transactions. We will also discuss valuation and cost of capital in an international context. The lecture will frequently draw on empirical studies, especially on event studies. Participants will be required to solve several case studies in groups of up to three students.
Learning outcomes
After completing this course, students will be able to develop and evaluate strategic rationales for M&A transactions and their structure. They will be able to build valuation models using real world data and evaluate whether a particular transaction makes sense from an economic perspective. Students will be able to implement valuation models using Microsoft Excel, to understand the legal and institutional context of M&A transactions, to interpret scientific studies and make appropriate inferences from them for the M&A process.
Necessary prerequisites
Modules FIN 540 and FIN 541
Recommended prerequisites
The course builds on the valuation techniques discussed in CF I (DCF, residual income and multiples valuation) and assumes that students already manage the material in Brealey, Myers, Allen, Corporate Finance, (McGraw-Hill, 10th edition, 2010), chapters 1–19, and in Berk and DeMarzo, Corporate Finance, (Pearson, 2nd edition, 2009) chapters 2, 9, 12, 14, 17–19, 23.
| Forms of teaching and learning | Contact hours | Independent study time |
|---|---|---|
| Lecture | 2 SWS | 12 SWS |
| Case Study Presentation | 1 SWS | 14 SWS |
| ECTS credits | 10 |
| Graded | yes |
| Workload | 300h |
| Language | English |
| Form of assessment | Final exam (60 min, 40%), case write-ups (45%), oral participation in case discussions (15%) |
| Restricted admission | yes |
| Further information | – |
Examiner Performing lecturer |  | Prof. Ernst Maug, Ph.D. Dr. Luisa Langer |
| Frequency of offering | Spring semester |
| Duration of module | 1 semester |
| Range of application | M.Sc. MMM, M.Sc. WiPäd, M.Sc. VWL, M.Sc. Wirt. Inf., M.Sc. Wirt. Math. |
| Preliminary course work | – |
| Program-specific Competency Goals | CG 1 |
| Literature | Weston, Fred J., Harold J. Mulherin and Mark Mitchell, Takeovers, Restructuring, and Corporate Governance, Prentice Hall; Cases copyrights: the list of cases will be published at the beginning of the term. |
| Course outline | The topic of this course is the restructuring of corporations through a number of different transactions, most prominently, mergers, acquisitions, and divestitures. Corporations frequently change their economic focus and their organizational structure, and it seems the pace of restructuring of many companies has accelerated. These decisions are costly and often motivated by increases in shareholder value, although in many cases other interests seem to be more dominant. The purpose of the lecture is to provide an understanding of these processes, and to provide an analytic framework to analyze the motivation of these activities and their individual merits. |