Mergers and Acquisitions The Relentless Pursuit of Synergy

Why M&As? Stakeholders, Framework and Process Legal and Regulatory Environment Accounting and Tax Issues an Overview

In Week 1 we paint the big picture of the M&A field We identify the value creation as the key motive behind these deals In order to analyze the value creation process, we introduce the stakeholders’ approach and study stakeholders’ motives in some detail Then we discuss the idea of synergy as the core objective of a successful M&A transaction and its pitfalls We introduce the framework and process of M&As and discuss the overall environment of these transactions – legal and regulatory issues (especially, antitrust motives), accounting treatment of M&As, and some important tax considerations We will see how the transaction environment and treatment influence the potential of successful implementation of a transaction and the corresponding value creation

Strategy and M&As. Theories of M&As

In Week 2 of the Course we discuss corporate strategy and its role in value creation We revisit some well-known schools of strategic thinking and frameworks of strategy formulation and implementation Our objective is to understand strategic motives behind M&A transactions

Equipped with the overall understanding of strategy, we proceed with the discussion of major theories of M&As – the motives behind the planned transactions that have the value creation potential In all theories we try to reveal the actual interests of the key stakeholders Finally, we study the actual deal mechanics and ways to overcome incumbent shareholder resistance (the free-rider problem)
Then we consider LBO and MBO transactions First, we analyze how a company may be taken private through heavy borrowing and further gradual debt repayment We illustrate the mechanics of an LBO/MBO transaction on a detailed example Finally, comments on a famous LBO case – RJR Nabisco – are provided
We proceed with the discussion of corporate governance Although in M&As this concept has somewhat narrower meaning, we try to relate the advantages and costs of a well-functioning and efficient corporate governance system to the development of the M&A market On a specific example we analyze the potentially value-destroying conflicts that may arise from the underdeveloped corporate governance system
Finally, we identify the role of post-transaction merger integration in the creation of value We provide some conclusions on M&A efficiency and synergy At the very end, we summarize the Course and the Specialization and briefly discuss the Final Project

Valuation of M&As

Week 3 is devoted to the central topic of the Course – M&A valuation We start with the analysis of the importance of valuation in the potential value creation Then we discuss and compare alternative approaches to valuation, paying special attention to free cash flow (FCF) valuation We analyze major value drivers – profitability, growth, cost of capital etc and derive general valuation formulas for special cases of no growth, constant and supernormal growth Then we apply the formulas to analyze value gains/losses in M&A transactions on examples

M&A Financing. LBOs and MBOs

In Week 4 we study M&A financing Motives, theories, and deal mechanics are fine – but where’s the money? If a transaction is friendly, a stock payment is likely to help But what if there’s a conflict? Then a lot of cash is needed, and a lot of debt must be issued One way is issuing junk bonds We discuss both facts and myths about junk bonds

Value-Creating Strategies Anti-Takeover Defenses Corporate Governance and Performance Conclusions – the Relentless Pursuit of Value

Week 5 – the final week of the Course – focuses on the details of value creating strategies We start with share repurchases and their effect on value Then we analyze anti-takeover defenses as value creating strategies