ICM227-Mergers and Acquisitions

Module Provider: ICMA Centre
Number of credits: 10 [5 ECTS credits]
Terms in which taught: Spring / Summer term module
Non-modular pre-requisites:
Modules excluded:
Module version for: 2016/7

Module Convenor: Dr Carol Padgett

Email: c.padgett@icmacentre.ac.uk

Summary module description:

The objective of the module is to introduce students to the technical and practical aspects of M&A deals. In lectures we shall explore (1) several corporate valuation methods (2) how to identify and value synergies and (3) how to finance an acquisition. Selected case studies will help students become familiar with the practical aspects of the deal making process.

Assessable learning outcomes:
By the end of the module it is expected that students will be able to:

  • Produce a strategic analysis for takeover transactions.
  • Use several corporate valuation methods including discounted cash flow (DCF), price/earning ratio, book value and similar transactions’ multiples
  • Identify and price synergies
  • Appraise alternative payment options for the target company and offer a view on which option is more appropriate for the deal given the financial situation of the bidder, growth prospects of both companies, type of acquisition (friendly or hostile), managerial incentives and market conditions.
  • Assess the likely implications of the financing choice on the credit rating, and cost of capital for the new company after the merger.
  • Understand the legal framework underpinning merger activity in Europe

Additional outcomes:
The module offers students the chance to work together to develop team-building and presentation skills.

Outline content:

  • What makes a mergers successful and what does not
  • SWOT analysis and other strategic tools
  • Bidder and target valuation: DCF, P/E, Book value and similar transactions’ multiples
  • Sensitivity analysis and triangulation
  • Synergies
  • Cash, stock and mix financing
  • Impact of financing methods on valuation
  • Payment methods
  • Decision rules
  • Takeover defences: poison pills, staggered boards, supermajority …
  • Legal aspects of M&A in Europe

Brief description of teaching and learning methods:
The core theory and concepts will be presented during lectures. Small class groups will discuss cases and problem sets, and project groups will meet independently to investigate specific topics/problems.

Contact hours:
  Autumn Spring Summer
Lectures 10
Seminars 5
Guided independent study 85
Total hours by term 100.00
Total hours for module 100.00

Summative Assessment Methods:
Method Percentage
Written assignment including essay 30
Report 40
Class test administered by School 30

Other information on summative assessment:
The written assignment is a short essay the students write individually on a practical aspect of mergers and acquisitions.
The report is an analysis of a merger proposed by the students. In this assessment, students work in teams and then formally present the findings summarised in their report to an examination panel.

Formative assessment methods:

Penalties for late submission:
Penalties for late submission on this module are in accordance with the University policy. Please refer to page 5 of the Postgraduate Guide to Assessment for further information: http://www.reading.ac.uk/internal/exams/student/exa-guidePG.aspx

Length of examination:

Requirements for a pass:
50% weighted average mark

Reassessment arrangements:
By individual or group project depending on circumstances.

Additional Costs (specified where applicable):
1) Required text books: This module does not have a single textbook but several recommended texts:
1. Bruner, Robert (2004) “Applied Mergers and Acquisitions. University Edition”, Wiley Finance
ISIN 0-471-39534-X
Price: £ 56.91
2. Bruner, Robert (2006) “Case Studies in Finance, 5e”, Mc-Graw Hill (4 copies available at the library)
ISBN-10: 0071267522, ISBN-13: 978-0071267526
Price: £6.93
3. Koller, Goedhart, Wessels (2010) “Valuation: Measuring and Managing the Value of Companies”, Fifth Edition, John Wiley and Sons.
ISBN 978-0-470-42470-4
Price: £47.44
4. Vernimmen, P. et al (2014) “Corporate Finance: Theory and Practice, 4e”, Wiley.
ISBN-10: 1118849337
ISBN-13: 978-1118849330
Price: £41.99
2) Specialist equipment or materials:
3) Specialist clothing, footwear or headgear:
4) Printing and binding:
5) Computers and devices with a particular specification:
6) Travel, accommodation and subsistence:

Last updated: 21 December 2016

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