Mergers & Acquisitions (MEAC) Summer term 2013

Syllabus

Elective Master level course Finance Department

Lecturers: Mark Wahrenburg & Jan Weidner (Jan Weidner will teach on 1 or more days). Teaching assistant: Nora Bock Lecture room: HZ8 & HZ12 Class days: Tuesday, 14.15 15.45 (every 2nd week) Thursday, 12.15 13.45 (weekly) Class schedule: 1. Termin: DO, 18.04.2013 in HZ 12 2. Termin: DI, 23.04.2013 in HZ 8 3. Termin: DO, 25.04.2013 in HZ 12 4. Termin: DO, 02.05.2013 in HZ 12 Jan Weidner teaches the class 5. Termin: DI, 07.05.2013 in HZ 8 6. Termin: DO, 16.05.2013 in HZ 12 7. Termin: DI, 21.05.2013 in HZ 8 8. Termin: DO, 23.05.2013 in HZ 12 9. Termin: DI, 04.06.2013 in HZ 8 10. Termin: DO, 06.06.2013 in HZ 12 11. Termin: DO, 13.06.2013 in HZ 12 12. Termin: DI, 18.06.2013 in HZ 8 Guest lecture Dr. Brigitte von Haacke 13. Termin: DO, 20.06.2013 in HZ 12 14. Termin: DO, 27.06.2013 in HZ 12 15. Termin: DI, 02.07.2013 in HZ 8 16. Termin: DO, 04.07.2013 in HZ 12 17. Termin: DO, 11.07.2013 in HZ 12 18. Termin: DI, 16.07.2013 in HZ 8 19. Termin: DO, 18.07.2013 in HZ 12 DO, 09.05.2013 no class (Christi Himmelfahrt) DO, 30.05.2013 no class (Fronleichnam)

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Preface
M&A has always been considered to be one of the most prestigious areas within investment banking. The customers of professional M&A advisors are primarily CEOs, CFOs and other directors of large and medium sized corporations. These customers expect their advisors to have broad expertise and work hard - often until late in the evening. Real world M&A cases exhibit challenges in various disciplines, ranging from accounting, legal, and financial issues to areas such as negotiation skills and psychology. As a result, M&A is a field where even professionals never stop learning and students sometimes feel confused by the complexity of the issues. If you look for a course where credit points are easily earned with little effort, you should not consider this course. If you look for a course, where the scope of exam preparation work is clearly and precisely defined, you may be better served with other courses. If you are anxious to dive into the complexities of real world M&A and corporate restructuring decision making, you will most likely enjoy this course very much. The course Mergers and Acquisitions is interactive and case based. For this reason, every student is expected to show up in the class room for every class session and is expected to actively participate in the class discussion. Every student is expected to prepare various homework assignments and shall also be prepared to present his or her findings in class. The course includes cases studies which are complex and require a lot of time for preparation. Please anticipate also that there is no such thing like the correct solution to many case studies and M&A related questions including the final exam.

Course Description
Corporate managers and their professional advisors must be familiar with major corporate restructuring transactions. These include mergers & acquisitions (M&A), but also sell-offs, spin-offs, equity carveouts, share repurchases, and leveraged recapitalizations among others. This interdisciplinary course draws from finance, economics, law, accounting and strategy to build a framework for understanding these transactions. The course takes seriously the often-conflicting goals of key players - directors, managers, stockholders, creditors, and employees - each trying to maximize their own interests subject to various behavioral, legal, and market constraints. The course begins with an examination of the structure and governance of the public corporation. The conflicts of interest between corporate managers and stockholders, which are often key issues in M&A transactions, are identified and the market forces and legal rules that help to resolve these conflicts are discussed. The course also provides practical training in the various valuation techniques that real-world managers and professional advisors use to evaluate restructuring transactions. Students are expected to use these techniques to analyze the restructuring transactions under discussion. At the same time, the course deals straightforwardly with the limits of these techniques. Next, the course covers the theoretical rationales for each of the various restructuring
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transactions. The available empirical evidence is examined to help sort out which motivations are most important and to shed light on how the transactions impact the welfare of managers, stockholders and other corporate stakeholders. Students completing the course successfully should be well positioned to better understand and take part in major corporate restructuring efforts, without falling prey to black-box analytical arguments that often hide the complexity and uncertainty of the restructuring landscape.

Learning Objectives
Upon completion of this course, you will be able to: 1. 2. 3. 4. 5. 6. Apply discounted cash flow approach to firm valuation Anticipate the capital market reaction to major restructuring announcements Evaluate the likely impact of M&A transactions on share prices Analyze the sources of gains in a Leveraged Buyout (LBO) Understand the governance framework of the modern firm and the conflicting interests of different stakeholders in restructuring situations Learn how to create value by restructuring bankrupt corporations

Grading
Your grade in the course will be based on the following components: Individual Valuation Assignment 20% (due before the 3rd class session) Final exam 80% All other assignments except the Individual Valuation Assignment will not be graded and you do not need to hand in a written solution. However, I expect that you will work on all assignments with due diligence.

Due Dates The Individual Valuation Assignment is due on April 29 at midnight.

Please turn in your assignment by email to my assistant Nora Bock by email, including a pdf or word document and an Excel spreadsheet. State your name and matriculation number on the first page of the assignment. Assignments sent after the due date will not be recognized.

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Individual Valuation Assignment

During the first two class sessions, you will learn how to value firms for M&A purposes. For the individual valuation assignment, you will have to value one publicly traded firm with various methods that we will discuss in class. Details will be communicated in class. Your analysis is restricted to 4 pages (1.5 spacing) of text plus an appendix that contains your spreadsheet calculations. Make sure that your text is self contained and encompasses all important information in a transparent manner. Please make sure that the spreadsheet is transparent and easy to understand for a reader. You are not allowed to collaborate with other students on the specific details of your individual assignment. We reserve the right to use plagiarism software in order to detect plagiarism among students. However, you are welcome to discuss general case related questions with other students. (I.e. where do search for a particular piece of information..? or How can I use Excel to calculate a specific formula ? etc.)

Readings
All required readings will be put on the learning platform OLAT (Link to OLAT: https://olat.server.uni-frankfurt.de/olat/dmz/ Please log in with your HRZ user name and password. For downloading the documents you have to register for the course via OLAT.). They include a number of articles as well as selected chapters from the textbook "Takeovers, Restructuring, and Corporate Governance", by Weston, Mitchell, and Mulherin as well as some academic and/or legal papers and articles. If you look for an additional reference for the valuation aspects of the course, a good bookwould be Valuation: Measuring and Managing the Value of Companies, Third Edition, by Copeland, Koller and Murrin, John Wiley & Sons, 2000. Brealey and Myers textbook Principles of Corporate Finance will also be useful. You will find a lot of helpful material on valuation of corporations on the much appreciated website of Aswath Damodaran. (http://pages.stern.nyu.edu/~adamodar/New_Home_Page/sitemap.htm).

Instructors
This course is taught by Mark Wahrenburg, Jan Weidner and invited guest speakers to be announced in class. Nora Bock is the teaching assistant. She will organize the valuation assignment and delivers exercise sessions in class. Mark Wahrenburg is chaired professor of banking and finance of Frankfurt University. He received a masters degree in business administration (Diplom) and a PhD from the University of Cologne. Professor Wahrenburg has been visiting professor at the Wharton School and served as a full professor of finance at the University of Witten/Herdecke. For several years, he worked as a consultant with McKinsey and American Management Systems.

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Jan Weidner graduated from Goethe University and has an almost lifelong experience in the M&A industry. He is Senior Managing Director at the Blackstone Group Germany. For many years he headed Morgan Stanley's M&A team for Germany and Austria.

Contact Information: Mark Wahrenburg Office: House of Finance, Room 2.55 Phone: +49 (69) 798 33 700 (Mrs Hofmann) / 715 Email: wahrenburg@finance.uni-frankfurt.de Teaching assistant Nora Bock nbock@wiwi.uni-frankfurt.de Phone: +49 (69) 798-33 717 Office: House of Finance, Room 2.60

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