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Module Catalogue

IB3H7-15 Mergers and Acquisitions

Department
Warwick Business School
Level
Undergraduate Level 3
Module leader
Nickolay Gantchev
Credit value
15
Module duration
10 weeks
Assessment
20% coursework, 80% exam
Study location
University of Warwick main campus, Coventry

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Introductory description

This is an elective module available for WBS and non-WBS students.

The principal module aims are:

  1. To equip students with a solid understanding of the economic motivations for combining two companies and the key drivers of value creation in M&A, including how the method of payment, sales process, participation of private equity and hedge fund investors, and broad market conditions influence the outcome of a deal.
  2. To provide students with an applied framework for evaluating M&A as an investment decision and understand common approaches for valuing potential targets.
  3. To engage students with real-world application and business case studies.

Module web page

Module aims

The principal module aims are:

  1. To equip students with a solid understanding of the economic motivations for combining two companies and the key drivers of value creation in M&A, including how the method of payment, sales process, participation of private equity and hedge fund investors, and broad market conditions influence the outcome of a deal.
  2. To provide students with an applied framework for evaluating M&A as an investment decision and understand common approaches for valuing potential targets.
  3. To engage students with real-world application and business case studies.

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

The module will cover the following topics:

  • History of M&A - merger waves
  • Economic motives for M&A
  • Deal structure and consideration
  • M&A valuation
  • Leveraged buyouts and private equity
  • Abnormal returns and merger arbitrage
  • Hostile takeovers and anti-takeover defences
  • Hedge fund activism

Learning outcomes

By the end of the module, students should be able to:

  • Understand the economic drivers of corporate M&A activities.
  • Be able to assess the advantages and disadvantages of alternative M&A deal structures and M&A approaches.
  • Understand the role of private equity and hedge funds in the takeover process.
  • Critically reflect on the acquisition process as a complex situation where both the buyer and the seller have to assess many issues (such as payment method, hostility, deal initiation, auction design).
  • Recognize merger waves, identify the key characteristics of past merger waves and provide theoretical explanations for their occurrence.
  • Identify the relevant issues in accounts of M&A activity in the financial press and relate these to theoretical explanations discussed in lectures.
  • Assimilate the findings of key research papers in the area of M&A, and critically reflect on the contribution of these papers to our understanding of the M&A process.
  • Evaluate and interpret market reaction to a particular M&A deal for the target, bidder and in combination.

Indicative reading list

Four required case studies. No core textbook. Three textbooks recommended as general references on M&A:

  1. Mergers, Acquisitions, and Other Restructuring Activities, 10th Edition, Donald M. DePamphilis, Academic Press (2019).
  2. Mergers, Acquisitions, and Corporate Restructurings, 7th Edition, Patrick A. Gaughan, John Wiley & Sons Inc. (2018).
  3. Investment Banking: Valuation, LBOs, M&A, and IPOs, 3rd Edition, Joshua Rosenbaum and Joshua Pearl, John Wiley & Sons Inc. (2020).

Subject specific skills

Learn how to apply different valuation techniques and modelling tools.
Understand how to perform an event study.
Develop the skills to construct a merger arbitrage trading strategy.

Transferable skills

Demonstrate effective problem solving and team working skills.

Study time

Type Required
Lectures 10 sessions of 2 hours (13%)
Seminars 9 sessions of 1 hour (6%)
Private study 48 hours (32%)
Assessment 73 hours (49%)
Total 150 hours

Private study description

Private Study.

Costs

No further costs have been identified for this module.

You do not need to pass all assessment components to pass the module.

Assessment group D3
Weighting Study time Eligible for self-certification
Assessment component
Group Presentation (15 CATS) 20% 15 hours No

Group Presentation (15 mins) with slides.
Reassessment component
Individual Assignment Yes (extension)
Assessment component
Online Examination 80% 58 hours No

Exam

~Platforms - AEP

  • Online examination: No Answerbook required
Reassessment component is the same
Feedback on assessment

Feedback will be provided via my.wbs.

Past exam papers for IB3H7

Pre-requisites

IB266 Fundamentals of Finance (for WBS students) or IB253 Principles of Finance 1 (for non-WBS students).

To take this module, you must have passed:

Courses

This module is Optional for:

  • UIBA-N20B BSc in Management
    • Year 3 of N20B Management
    • Year 3 of N20B Management
    • Year 3 of N23K Management with Accounting
    • Year 3 of N234 Management with Digital Business
    • Year 3 of N235 Management with Entrepreneurship
    • Year 3 of N232 Management with Finance
    • Year 3 of N252 Management with Marketing
    • Year 3 of N23L Management with Strategy and Organisation
  • UIBA-MN3C Law and Business Four Year (Qualifying Degree)
    • Year 3 of MN3C Law and Business Four Year (Qualifying Degree)
    • Year 4 of MN3C Law and Business Four Year (Qualifying Degree)
  • Year 3 of UIBA-N400 Undergraduate Accounting and Finance
  • UIBA-N404 Undergraduate Accounting and Finance (with Foundation Year and Placement/Undergraduate Partnership Programme)
    • Year 5 of N4N7 Accounting and Finance (Foundation Year and Intercalated)
    • Year 5 of N404 Accounting and Finance (Foundation Year and Placement)
    • Year 5 of N405 Accounting and Finance (Foundation Year and UPP)
    • Year 5 of N403 Accounting and Finance (with Foundation Year)
  • Year 4 of UIBA-N403 Undergraduate Accounting and Finance (with Foundation Year)
  • UIBA-N401 Undergraduate Accounting and Finance (with Placement Year/Undergraduate Partnership Programme)
    • Year 4 of N401 Accounting and Finance (Placement)
    • Year 4 of N402 Accounting and Finance (Undergraduate Partnership Programme)
  • Year 3 of UCSA-I1N1 Undergraduate Computer Science with Business Studies
  • Year 4 of UCSA-I1NA Undergraduate Computer Science with Business Studies (with Intercalated Year)
  • Year 1 of UIOA-EEU Undergraduate EU Exchange
  • Year 4 of UGEA-RN21 Undergraduate German and Business Studies
  • Year 3 of UIPA-L8N1 Undergraduate Global Sustainable Development and Business
  • Year 4 of UIPA-L8N2 Undergraduate Global Sustainable Development and Business Studies (with Intercalated Year)
  • Year 4 of UIBA-N1RA Undergraduate International Business with French
  • Year 4 of UIBA-N1RB Undergraduate International Business with German
  • Year 4 of UIBA-N1RC Undergraduate International Business with Italian
  • Year 4 of UIBA-N1RD Undergraduate International Business with Spanish
  • UIBA-N20F Undergraduate International Management
    • Year 4 of N20F International Management
    • Year 4 of N20F International Management
    • Year 4 of N20S International Management (with Accounting)
    • Year 4 of N20T International Management (with Chinese)
    • Year 4 of N20P International Management (with Entrepreneurship)
    • Year 4 of N20M International Management (with Finance)
    • Year 4 of N20U International Management (with French)
    • Year 4 of N20L International Management (with Marketing)
    • Year 4 of N20V International Management (with Spanish)
    • Year 4 of N20W International Management (with Strategy and Organisation)
    • Year 4 of N20N International Management with Digital Business
    • Year 4 of N20E Management (with Foundation Year)
    • Year 4 of N234 Management with Digital Business
  • Year 3 of UIBA-MN3A Undergraduate Law and Business Studies
  • UIBA-N20G Undergraduate Management (with Foundation Year and Intercalated Year/Undergraduate Partnership Programme)
    • Year 5 of N20G Management (Foundation Year and Intercalated)
    • Year 5 of N20H Management (Foundation Year and UPP)
    • Year 5 of N23B Management with Finance (with Foundation Year and Intercalated Year)
    • Year 5 of N23C Management with Finance (with Foundation Year and Undergraduate Partnership Programme)
    • Year 5 of N25B Management with Marketing (with Foundation Year and Intercalated Year)
    • Year 5 of N25C Management with Marketing (with Foundation Year and Undergraduate Partnership Programme)
  • UIBA-N20E Undergraduate Management (with Foundation Year)
    • Year 4 of N20E Management (with Foundation Year)
    • Year 4 of N23N Management with Accounting (with Foundation Year and Placement Year)
    • Year 4 of N23M Management with Accounting (with Foundation Year)
    • Year 4 of N23E Management with Digital Business (with Foundation Year)
    • Year 4 of N23F Management with Entrepreneurship (with Foundation Year)
    • Year 4 of N23D Management with Finance (with Foundation Year)
    • Year 4 of N252 Management with Marketing
    • Year 4 of N254 Management with Marketing (with Foundation Year)
    • Year 4 of N23P Management with Strategy and Organisation (with Foundation Year)
  • UIBA-N20C Undergraduate Management (with Placement Year/Undergraduate Partnership Programme)
    • Year 4 of N20M International Management (with Finance)
    • Year 4 of N20B Management
    • Year 4 of N20D Management (Undergraduate Partnership Programme)
    • Year 4 of N20C Management (with Placement Year)
    • Year 4 of N20Q Management with Accounting (with Placement Year)
    • Year 4 of N236 Management with Digital Business (with Placement Year)
    • Year 4 of N237 Management with Entrepreneurship (with Placement Year)
    • Year 4 of N232 Management with Finance
    • Year 4 of N233 Management with Finance (with Placement Year)
    • Year 4 of N253 Management with Marketing (with Placement Year)
    • Year 4 of N23L Management with Strategy and Organisation
    • Year 4 of N20R Management with Strategy and Organisation (with Placement Year)
  • Year 3 of UMAA-G1N4 Undergraduate Mathematics with Business Studies
  • Year 4 of UMAA-G1N5 Undergraduate Mathematics with Business Studies (with Intercalated Year)
  • UIOA-EOS Undergraduate Overseas Exchange
    • Year 1 of UEOS Undergraduate Overseas Exchange
    • Year 1 of UEOS Undergraduate Overseas Exchange
  • Year 4 of UPXA-F3ND Undergraduate Physics and Business Studies (with Intercalated Year)
  • Year 3 of UPXA-F3N2 Undergraduate Physics with Business Studies
  • Year 1 of UIOA-EUS Undergraduate USA Exchange