MERGERS, ACQUISITIONS AND VALUATION

Course Objectives

  • To enable a basic understanding of domestic and cross border mergers and acquisitions
  • To examine the rationale and methods of corporate restructure
  • To explore the strategic angle of M&A in the background of both business and product life cycle
  • To grasp the process of mergers and acquisitions including the due diligence process
  • To evaluate the various approaches to valuation and price negotiation in M&A process

UNIT I Mergers and Acquisitions

Mergers and Acquisitions – Meaning and Types – motives behind mergers – theories of mergers – operating, financial and managerial synergy of mergers – value creation in mergers – internal and external change forces contributing to M & A activities

UNIT II Corporate Restructuring

Methods of Restructuring – Joint Ventures – Sell off and Spin off – Divestitures – Equity Carve out – Leveraged Buyouts (LBO) – Management Buyouts – Master Limited Partnerships – Employee Stock Ownership Plans (ESOPs)

UNIT III Strategic Aspects of M&A

A strategic perspective – Industry Life Cycle and Product Life Cycle analysis in M&A decision, strategic approaches to M&A – SWOT analysis, BCG matrix, Porter’s five forces model.

UNIT IV Merger Process

Dynamics of M&A process – identification of targets – negotiation – closing the deal. Five–stage model – Due Diligence (detailed discussion); Process of merger integration – organizational and human aspects – managerial challenges of M & A. Methods of financing mergers – cash offer, share exchange ratio

UNIT V Valuation

Valuation as a tool for strategic negotiations - Approaches – Discounted Cash Flow Valuation – Relative Valuation – Net Physical Assets method – Yield method - Valuing Operating and financial synergy – Valuing corporate control – Valuing of LBO

Learning Resources

  • Patrick A Gaughan, Mergers, Acquisitions, and Corporate Restructurings, 6ed, 2017
  • Manu Sharma, Mergers & Acquisitions and Corporate Valuation, DT–Management Textbooks), 2015
  • Chandrashekar Krishnamurti, Mergers, Acquisitions and Corporate Restructuring, SAGE Publications Pvt. Ltd., 1st Edition, 2008
  • Donald DePamphilis, Mergers, Acquisitions, and Other Restructuring Activities, An Integrated Approach to Process, Tools, Cases, and Solutions, 9th Edition, 20

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