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Regular version of the site
Master 2019/2020

Mergers, Acquisitions and Companies Restructuring

Type: Elective course (Finance)
Area of studies: Finance and Credit
Delivered by: Department of Financial Management
When: 2 year, 1 module
Mode of studies: Full time
Instructors: Anna Novak
Master’s programme: Finance
Language: English
ECTS credits: 4

Course Syllabus

Abstract

Mergers, Acquisitions and Corporate Restructurings This course is focused on key theoretic and applied issues concerning M&A and restructurings deals. It gives the outline of mergers and diverstitures’ motives: both fundamental and behavioral; factors of value creation; company’s choice and valuation for M&A purposes; deals financing, etc. The course is especially useful for those who are planning to work as financial consultants and analytics to develop improve and evaluate the economic efficiency of corporate strategy. The course covers the following topics: Basic definitions of mergers and acquisitions deals. M&A classification; theories explaining M&A deals. Key motives of M&A; M&A waves in Russia and abroad; building of a corporate strategy of external growth through mergers and acquisitions. Wheel of opportunity & Fit chart approach; Valuation of deal’s efficiency; Financing issues; Due Diligens. Integration after a merger; Hostile takeovers’: takeover tactics and antitakeover measures; Joint Ventures and Strategic Alliances; Corporate restructurings. Current control is represented with home assignment which, an analytical report on M&A deal. Final control is represented with an exam in form of written test. The final grade for the discipline is set after the examination, taking into account the results of current control. The grading criteria and criteria for assessing knowledge and skills are defined by the Program of Disciplines, which is publicly available on the HSE's corporate website
Learning Objectives

Learning Objectives

  • The objectives of the discipline "Mergers, Acquisitions and Restructuring of Companies" are: - to review the theoretical foundations of mergers, acquisitions and restructuring of companies, principles of pricing and financing in M&A deals; - to give students practical skills of building a strategy, estimating the value generated by M&A deals; - to prepare students to analyse trends and prospects for consolidation at the sectoral, national and global levels
Expected Learning Outcomes

Expected Learning Outcomes

  • • Distinguish the forms of restructuring a company in Russia and abroad, the motivation and prerequisites of M&A deals, the specifics of legislative regulation
  • • Evaluate the effectiveness of the transaction, forecast the prospects and consequences of M&A deal
  • • Estimate the value of the target company of the merger or acquisition; • Build a strategy for external growth and development of the company through M&A
  • • Identify the tactics of hostile takeovers and define antitakeover measures
  • • Choose methods of financing transactions taking into account strategic, financial, tax aspects
  • • Estimate the value of the target company of the merger or acquisition
  • • Build a strategy for external growth and development of the company through M&A
Course Contents

Course Contents

  • Concepts of M&A transactions. Classification of M&A transactions
    Definitions of “merger” (“statutory merger”, “subsidiary merger”, “reverse subsidiary merger”), “corporate consolidation”, “acquisition”. Legal and regulatory environment, accounting and tax issues. Classification of M&A, classification of corporate control, strategical and financial deals, vertical, horizontal integration, conglomerates
  • Waves of M&A in Russia and USA
    Waves of M&A activities in Russia and USA. Cyclical character of M&A activity, factors of M&A waves, major tendencies in the market. Major deals, leading regions, economic sectors. The role of State and investment bankers (consultants) in M&A market
  • Key motives of M&A. Value of synergy
    Importance of valuation in the potential value creation. Alternative approaches to valuation, free cash flow (FCF) valuation. Major value drivers – profitability, growth, cost of capital, tax optimization, depreciation of assets acquired, etc. Operational, financial synergy, value of synergy. Steps in valuing synergy. Agency theory of free cash flow, hubris theory
  • Value of control. Valuation of deal’s efficiency
    Value of control in M&A. Value of the firm “status quo”, value of the firm with the optimal management, probability of getting the value of control. Corporate governance, the set of antitakeover provisions, the role of the ownership structure in M&A decisions. Mechanism of changing management: Activist investors; proxy contests; forced CEO turnover; hostile acquisitions. Determinants of likelihood of change: institutional factors; firm-specific factors
  • The strategy of external growth with M&A. WOFC method. Delphi method
    Building a strategy for the strategic alliance. Wheel of opportunity and fit chart - method of creation of a strategic plan. Qualitative analysis of the strength and weaknesses of the buyer, Porter 5 Forces. Complements and supplements in the Fit chart. Delphi method to range the projects
  • Financing of M&A
    Choosing the method of financing for the M&A deal. Stock payment for friendly deals and issuing junk bonds for hostile acquisitions. Mechanism of LBO and MBO transactions. Choosing the method of payment – all-cash transaction, common stocks, preferred stocks, hybrid instruments, contingent transactions (ean-out), combined transaction
  • Due diligence, integration of M&A
    Framework and Process of M&A. Organization and importance of “Due diligence”. Completion of the transaction, the period after completion. Implementation and integration – key to success. Main issues of integration. Examples of costly integration
  • Hostile takeover. Tactics of the defense against the takeover
    Anti-takeover defenses. Pre-offer defenses, post-offer defenses: Staggered board; Super-majority amendment; Fair price amendment; Poison pills; Authorization of preferred stock; Cumulative voting; White Knight Bids; of Targeted Share Repurchases; golden handcuffs and others. Effects of Antitakeover Amendment Proposals. Russian specific of hostile takeovers
  • Restructioning of the company
    Forms of corporate restructuring. Sell-off, spin-off, split-off, split-out. Equity carve out, divestiture. Effectiveness of divestiture, creating value in divestiture
Assessment Elements

Assessment Elements

  • non-blocking case-study
  • non-blocking test
  • non-blocking exam
Interim Assessment

Interim Assessment

  • Interim assessment (1 module)
    0.35 * case-study + 0.3 * exam + 0.35 * test
Bibliography

Bibliography

Recommended Core Bibliography

  • Mergers, Acquisitions and Corporate Restructurings, 5th ed., XVI, 655 p., Gaughan, P. A., 2011

Recommended Additional Bibliography

  • Cherkasova Victoria, & Zakharova Evgeniya. (2016). Suboptimal investments and M&A deals in emerging capital markets. Ekonomski Anali, (208), 93. https://doi.org/10.2298/EKA1608093C