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Introduction (Bruner, Chapters 3 and
4):
- Classification of different kinds of mergers – vertical, horizontal
and conglomerate
- Are mergers generally profitable? To whom? To acquirers? To targets?
- Drivers of Profitability (p. 54)
- Explanations of M&A activity (p. 75)
- Hubris
- Market Manias
- Overvaluation of Stocks and the Asymmetry of Information
- Agency Costs and the Correction of Governance Problems
- Monopoly, Competitive Behavior and Rent-Seeking Behavior
- Industry Shocks
- Creative Destruction (p. 84)
Strategy (Bruner, Chapter 6):
- SWOT Analysis with focus on coming up with rationales for merger
- Porter Analysis with focus on coming up with rationales for merger
- Shapiro Analysis with focus on coming up with rationales for merger
- Strategic Maps
- Growth-Share Matrices
- Kauppi’s list
- Organic and Inorganic Growth
- Motives for Inorganic Growth (p. 139 ff.)
- Maturing Product Line
- Regulatory or Antitrust Limits
- Value creation through horizontal and Vertical Integration
- Value Creation through Diversification
- Transactions for Inorganic Growth (cf. also Exhibit 6.10)
- Contractual Relationships
- Strategic Alliances
- Joint Venture
- Minority Investment
- Framework for Choosing a path for Inorganic Growth(p. 165)
Valuation (Bruner, Chapter 9):
- Valuation using multiples
- DCF Valuation
The techniques that we discuss in class are to help you value your merger
candidates – you will not be tested directly in this area for
the exam on the theoretical concepts. You will have to know how to solve
problems similar to the workbook problems.
Real options (Bruner, Chapters 10, 14)
- What are options?
- How to represent situations as growth options, abandonment options
or timing options.
- How to use the binomial approach to value options
- How to use the Black-Scholes method to value options
- Difference between options and opportunities.
You will also have to know how to solve problems similar to the workbook
problems.
Deal Design (Bruner, Chapter 18)
- Factors to consider in deal design
Reorganization Form (Bruner, Chapters 19 and 20)
- Implications of reorganization form for issues of tax liability, risk
exposure, control and continuity.
- Descriptions of the different reorganization forms (p. 550 ff.)
- Considerations in selecting the form of payment (p. 573 ff.)
Creating the Win-Win deal (Bruner, Chapter 21)
- Computation of the bargaining ranges using a DCF and a P/E approach
to valuation.
- Use of the bargaining ranges.
Risk Management (Bruner, Chapter 22 and 23)
- Contingent Payments in M&A (pages 610 ff.)
- Sources of Transaction Risk
- Types of risk management
- Analyzing and valuing collars
Synergies (Bruner, Chapter 11)
- Using a Valuation framework to assess synergies
- Sources of synergies in place
- Synergistic effects on WACC
- Real Option synergies
- Valuing Synergies
Hostile Takeovers (Bruner, Chapter 32, 33)
- Profiles of hostile takeover targets
- Role of the arbitrageur in a hostile takeover
- Analyzing arbitrage spreads
- Coercive tender offers
- Takeover attack tactics (pp. 831 ff.)
- Takeover defenses (pp. 833 ff.)
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