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IB9Y3-15 Mergers and Acquisitions and Corporate Control

Department
Warwick Business School
Level
Taught Postgraduate Level
Module leader
Jana Fidrmuc
Credit value
15
Module duration
10 weeks
Assessment
45% coursework, 55% exam
Study location
University of Warwick main campus, Coventry

Introductory description

This module is designed to introduce students to the basic issues in mergers and acquisitions from corporate finance point of view, including valuation. The module will be based on the main research papers in the field.

Module aims

This module will provide students with an understanding of:

Value creation in takeovers
Abnormal returns
Merger waves (main characteristics of the individual waves and theoretical explanations for cyclical patterns)
Private equity
Ownership structure (costs and benefits of concentrated versus dispersed ownership, empirical evidence) and law and finance (shareholder protection)
Modelling the takeover process

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:

  1. Value creation in takeovers
  2. Abnormal returns
  3. Merger waves (main characteristics of the individual waves and theoretical explanations for cyclical patterns)
  4. Private equity
  5. Ownership structure (costs and benefits of concentrated versus dispersed ownership, empirical evidence) and law and finance (shareholder protection)
    6.Modelling the takeover process
    7.Valuation in the context of M and As
    An underpinning thread throughout this module is the financial manager's responsibility to act legally, ethically and thus professionally, along with the potential consequences of the reverse on stakeholders.

Learning outcomes

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

  • Demonstrate comprehensive understanding of value creation in M&As and its measurement, the bidding process, merger waves, and private equity
  • Demonstrate systematic understanding of DCF valuation in the context of M&As
  • Assimilate findings of key research papers, and critically reflect on their contribution to our understanding of the M&A process
  • Analyze and critically evaluate real-world cases, and communicate the findings

Indicative reading list

Patrick A. Gaughan; Mergers, acquisitions, and corporate restructurings, Wiley, 2007.
Weston, Mitchel and Mulherin: Takeovers, Restructuring, and Corporate Governance (4th international edition, Pearson).
Martynova and Renneboog; A Century of Corporate Takeovers: What Have We Learned and Where Do We Stand?, Journal of Banking and Finance, 2008.
Devos, Kadapakkam and Krishnamurthy, 2009, ‘How Do Mergers Create Value? A Comparison of Taxes, Market Power, and Efficiency Improvements as Explanations for Synergies,’ Review of Financial Studies 22(3), 1179-1211.
Harford, 2005, ‘What drives merger waves?’ Journal of Financial Economics 77, 529-560.

Research element

The module builds on academic literature in the field of M&As. Students work with academic papers and are encouraged to think about their dissertation topic.

Subject specific skills

Demonstrate practical knowledge of a spreadsheet package and IT applications in M&A related analysis (event studies, valuation)
Prepare professional reports reviewing M&A deals

Transferable skills

Demonstrate analytical and problem solving skills
Demonstrate written communication skills

Study time

Type Required
Lectures 9 sessions of 2 hours (12%)
Seminars 8 sessions of 1 hour (5%)
Private study 50 hours (33%)
Assessment 74 hours (49%)
Total 150 hours

Private study description

Self study to include pre-reading for lectures and seminars

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 D5
Weighting Study time Eligible for self-certification
Assessment component
Numerical Group Assignment 20% 15 hours No
Reassessment component is the same
Assessment component
Group Presentation 20% 15 hours No
Reassessment component is the same
Assessment component
Class participation 5% 4 hours No
Reassessment component is the same
Assessment component
On-campus Examination 55% 40 hours No
  • Answerbook Pink (12 page)
  • Students may use a calculator
Reassessment component is the same
Feedback on assessment

Summary feedback on individual assignment and feedback on group assignments provided on my.wbs. Feedback on writing style provided in class

Past exam papers for IB9Y3

Pre-requisites

Due to MSc Business and Finance students having less corporate finance background than other students taking this elective module, if these students have failed any term 1 tests, then they are not permitted to join the module.

Courses

This module is Optional for:

  • Year 1 of TIBS-N4N3 MSc in Accounting and Finance
  • Year 1 of TIBS-N300 MSc in Finance
  • Year 1 of TIBS-N1C3 Postgraduate Taught (Financial Management)
  • Year 1 of TIBS-LN1J Postgraduate Taught Finance and Economics