Please note the prerequisites for this course at the bottom of the course description.
Mergers and acquisitions (M&As) are frequently in the news and a prominent part of daily business in the life of many executives. Yet, most mergers and acquisitions fail from an important economics perspective – the creation of shareholder value – suggesting an apparent merger paradox. On the one hand, the explosive growth in the number, size, and complexity of mergers and acquisitions in recent decades demonstrates how ingrained this kind of business combinations have become in the global business community. The number of acquisitions made by firms worldwide has skyrocketed over the last 20 years: in 2017 alone, companies have spent US$ 3.7 trillion in acquisitions. Yet, managers often report dissatisfaction with the outcomes of merger deals which is why a significant number are divested or lead to the dissolution of the companies involved. As such, this course focuses on why mergers take place – even while at other times they seem to be totally irrational –, how they can be managed, and what role regulation can play in this form of market restructuring. Next to being an important factor in the economy, M&As also represent a major area in strategic management, finance and organization. Because of this, the course brings together many different disciplines within economics and business that are essential to fully understand, analyze, and manage takeovers.
The course contains a common part for all students (weeks 1-4) and is then divided into two tracks having different orientations (weeks 5-9). The first track analyzes the M&A process from a strategy perspective looking at the determinants and implications of different strategic decisions throughout the merger process (Strategy track), whereas the second track delves into valuation techniques that enable the acquirer to correctly determine the offer price in an acquisition (Finance track). At the beginning of the course, all students have the chance to learn the basics of both M&A strategy and valuation; then, from mid-course (starting at week 5), students will follow lectures and seminars pertaining to either of the tracks. Students are required to choose the track to follow in the first week of the course.
- M&A planning and valuation report and presentation (40%, group)
- Final examination (60%, individual)
Suggested reading materials:
- Fundamentals of Corporate Finance (Brealey, Myers, Marcus; ISBN: 9789814670944).
- Damodaran, A., (2010); The Little Book of Valuation; NYU Sterns School of Business
A more specific guideline on the most important concepts and reading suggestions will be published on blackboard at the beginning of the course. Throughout the course additional materials (for example: excel files or accounting examples) will be made available to help with the valuation assignment.
Mandatory course material:
The materials in the book will be complemented with some academic literature that will be provided to the students
- DePampilis, D. Mergers and Acquisitions Basics ISBN: 9780123749482) [only for students in the Strategy track]
- Damodaran, A. Damodaran on valuation: security analysis for investment and corporate finance (2nd edition) (ISBN: 9780471751212) [only for students in the Finance track]
Students are assumed to be familiar with basic finance and accounting principles such as: cash flows, time value of money and discounting. Prior exposure to principles of equity ownership, basic governance and stock markets is also assumed. Suggested reading materials: Fundamentals of Corporate Finance (Brealey, Myers, Marcus; ISBN: 9789814670944). Damodaran, A., (2010); The Little Book of Valuation; NYU Sterns School of Business. A more specific guideline on the most important concepts and reading suggestions will be published on blackboard at the beginning of the course. Additional effort is required in the case your financial knowledge is limited.
In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. Please note that access codes are not re-usable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN number. Separate or spare codes are usually not available.