MFIN7010, May–June 2021

MFIN7010
Mergers, Acquisitions, and Corporate Restructuring
The University of Hong Kong
Faculty of Business and Economics

1 Instructor
• Dr. Matthias Buehlmaier

• Phone: +852 2219 4177

• E-Mail: buehl-teaching [at] hku.hk

• Office hour: Wednesdays from 4:00 p.m. to 7:00 p.m. (tentative). To allow for better
preparation, students should email the instructor a brief description of the consultation
topics they wish to discuss at the latest on the day before the consultation. Students who
cannot attend the consultation hours due to a time clash with other courses/tutorials may
request a separate consultation time.

2 Teaching Assistant
• Mr. Clive HO Man Chung

• Phone: +852 2857 8514

• E-Mail: hoclive [at] hku.hk

• Office: Room 1026, K.K. Leung Building

• Office hour: By appointment

3 Course Description and Objectives

3.1 Description and Objectives
This course is designed to develop a solid understanding of commonly discussed and applied
issues in mergers and acquisitions (M&As). The topics covered in this course include the
M&A process, methods of valuing a target firm, valuing synergies, the form of payment and
financing, assessing highly levered transactions, governance in M&A, and M&A negotiations.
M&A cases will be used in discussing these topics. By going through analyses and discussions
of real-life M&As, students will gain experience in the application of financial theories and
techniques to evaluate M&A decisions and transactions.

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3.2 Prerequisities
This course is fast-paced and challenging. I assume that you have basic training in corporate
finance. In other words, you are familiar with such concepts and theories as risk, return,
capital budgeting, discounted cash flow, cost of capital, etc. The course will be rigorous and
demanding. Your learning will crucially depend on the amount of time and effort you commit.

3.3 Course Materials

• Class notes and assigned readings will be distributed in class.

• Related M&A cases (from Harvard Business School and Darden School of Business) will
also be provided.

• The recommended textbook is “Investment Banking: Valuation, LBOs, M&A, and IPOs”
by Joshua Rosenbaum and Joshua Pearl (Wiley, university third edition, 2020). If avail-
able, please obtain the university edition, since it contains additional material such as
end of chapter questions.

4 Intended Learning Outcomes (ILOs)

On completion of this course, students should:

• ILO1: Be able to understand the process and economic rationale for M&As.

• ILO2: Be able to understand typical valuation techniques in M&As.

• ILO3: Be able to apply the valuation techniques to M&A assessment and decision-
making.

• ILO4: Have acquired analytical skills in analyzing real-world cases in M&As.

• ILO5: Have developed skills in group work, including communication, collaboration, and
presentation.

5 Alignment of Program and Course Outcomes

MFin Program Learning Outcome (PLO) Course Learning Outcome (CLO)
1. Acquisition of quantitative techniques of fi- ILOs 2–4
nance
2. Acquisition of advanced knowledge in finance ILOs 1–4
3. Application and integration of financial knowl- ILOs 1–4
edge and technical skills to identify and tackle
practical problems
4. Inculcating leadership, professional ethics and ILO 5
competence in finance
5. Mastering communication skills ILOs 4 and 5

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6 Teaching and Learning Activities

6.1 Lectures on Major Concepts and Issues
• Interactive lectures with power-point slides will be conducted with the lecturer explain-
ing and illustrating the concepts and analytical skills. Students will be invited for active
participation for in-class discussion, to share their views and experiences in applying the
concepts.

• Major focus: ILOs 1, 2 and 3

• Expected contact hours: 36

6.2 Assignments
• Selected review questions will be assigned for students to practice and gain better un-
derstanding of the concepts discussed. The assignments will be graded.

• Major focus: ILOs 1, 2 and 3

• Expected contact hours for review questions and/or assignments: 10

• Expected contact hours for final group project: 25

6.3 Case Analysis

• Students will form case-study groups and analyse M&A cases. For each case, each study
group will analyse the case in advance following the given study questions, and submit
an analysis before class discussion. All students are expected to actively participate in
class discussions.

• Major focus: ILOs 1, 2, 3, 4 and 5

• Expected contact hours: 15

6.4 Self-Study
• Self-study involves studying without direct supervision or attendance in a classroom.

• Expected contact hours: 45

7 Assessment
Assessment Method Weighting ILOs
1. Participation in case discussions (10%) and class dis- 15% ILOs 1, 2, 3 and 4
cussion/participation (5%)
2. Written case reports 10% ILOs 1, 2, and 3
3. Midterm 35% ILOs 1, 2 and 3
4. Group project (project presentation, individually 10% ILOs 1, 2, 3, 4 and 5
evaluated)
5. Group project (group report) 30% ILOs 1, 2, 3, 4 and 5

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8 Standards for Assessment

This section describes in detail the standards for assessment. The corresponding weighting is
given in Section 7.

8.1 Lecture Attendance and Participation

Lecture attendance and individual contribution in class discussion will be the main factors in
assigning points for this component. Grading criteria are as follows:
A B C D F
Well pre- Reasonably Not well Not well No prepara-
pared for prepared prepared for prepared for tion for class
class dis- for class class discus- class dis- discussion,
cussion, discussion, sion, limited cussion, no no sharing of
very active in quite active sharing of sharing of views
sharing views in sharing views views
views

8.2 Assignments
This component includes students’ group work of assigned study questions and M&A case
writeups. Grading criteria are as follows:
A B C D F
90%–100% 80%–89.9% 70%–79.9% 60%–69.9% 0%–59.9%

8.3 Midterm
Grading criteria are as follows:
A B C D F
90%–100% 80%–89.9% 70%–79.9% 60%–69.9% 0%–59.9%

8.4 Group project

This component will be graded based on students’ performance in the presentation and report
of their term project. Detailed instructions for the group project will be handed out in class.
Grading criteria are as follows:
A B C D F
Excellent or Good to very Fair to good Fair ratings Absent from
very good good ratings ratings on on all criteria case discus-
ratings on all on some or all some or all sion or fail to
criteria criteria criteria submit the
case report

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9 Academic Conduct
9.1 Attendance
• Students are required to attend classes on time.

• Please sign your attendance with the TAs in each session, or if in Admiralty Town Centre,
students are required to tap their student cards on the electronic card reader to record
their attendance.

• Coming late to class is discouraged. If students are 30 minutes late, they will be regarded
as not having attended the class.

• To ensure that students gain the maximum benefit from classes, students are required
to attend at least 70% of classes for this course; otherwise they may be treated as having
failed the whole course.

9.2 Academic Dishonesty

The University Regulations on academic dishonesty will be strictly enforced. Please check the
University Statement on plagiarism on the web: http://www.hku.hk/plagiarism/
Academic dishonesty is behavior in which a deliberately fraudulent misrepresentation is
employed in an attempt to gain undeserved intellectual credit, either for oneself or for another.
It includes, but is not necessarily limited to, the following types of cases:

• Plagiarism: The representation of someone else’s ideas as if they are one’s own. Where
the arguments, data, designs, etc., of someone else are being used in a paper, report, oral
presentation, or similar academic project, this fact must be made explicitly clear by citing
the appropriate references.

• Cheating on In-class Exams: The covert gathering of information from other students,
the use of unauthorized notes, unauthorized aids, etc.

10 Course Schedule
This schedule is tentative and subject to change. The topics in the table below correspond
to the chapters of the same name in the textbook. Please visit the course website for the
latest announcements. Please see the latest official MFin timetable (administered by the MFin
Office) to check the time and room for each date in the table below.
Midterm: Please note that the midterm may be conducted online or by means of
a take-home exam or take-home essay due to the Covid-19 situation. At the moment,
the midterm arrangements are tentative and subject to change. An announcement
will be made in due date about the midterm arrangements.

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Lecture Date Topic

1 May 11 Overview of M&A; sell-side M&A
2 May 13 Sell-side M&A; trading comps
3 May 18 Trading comps; transaction comps
4 May 20 Transaction comps; DCF
5 May 25 DCF; Case 1 (Pinkerton)
6 May 27 LBOs
7 June 1 LBOs; LBO analysis;
end of today: cutoff of study material for midterm
8 June 3 LBO analysis; buy-side M&A
9 June 8 Midterm; group project proposal presentations (not evaluated,
just to provide early feedback to students)
10 June 10 Buy-side M&A; Case 2 (Berkshire Partners)
11 June 15 Buy-side M&A; Group project presentations (depending on class size)
12 June 17 Group project presentations

Additional information:

• Midterm: In case there is a time clash, e.g. with the CFA exam, please contact the
instructor as soon as possible.

• For the group project, students are not allowed to form groups with students in different
sections. Only groups from students in the same section will be admitted.

• Among other topics and the topics given above, we will cover ethics, time value of money,
analysis of principal financial statements, mergers and acquisitions, corporate restruc-
turings, and valuation of equity securities.