Applied Mergers & Acquisitions FINAN 6590
Location: SFE 3160
Class schedule: Tuesday 6 p.m. to 10 p.m.
Instructor: Norman W. Hoffmann, Adjunct Faculty
Cell Phone:757-478-5569
E-mail:
Office hours: By appointment
Applied Mergers & Acquisitionsfocuses on developing an understanding of the practitioner’s skills and perspectives relating to the creation of investor value through business acquisitions. Designed for graduate students with a keen interest in business development, the course employs the case method approach to provide more in-depth exposure to 1) the identification, investigation, assessment, and valuation of acquisition targets; 2) the perspectives, tools and disciplines required for successful acquisition; and 3) deal structure and the strategic orientation underlying those efforts as a foundation for producing future investment returns.
As prerequisites for the course, you should have a keen analytic sense, a high comfort level with financial statement interpretation, and strong familiarity with net present value calculations. To succeed, you should be prepared to read assigned texts carefully, dissect and interpret Case Studies thoroughly, participate in peer collaborations and class discussions, and demonstrate astute insight in your written assignments.
In addition to the text and a diversity of instructive case studies, the course will leverage contemporary news articles and other research materials to evaluate a variety of actual transactions through lively class discussions with the mission of illuminating best practices in the discipline. Each session will focus on key topics which will be explored as they apply in practice through the assigned case studies. Assessment and analytical tools will be employed to provide experience with business valuation so you may better assess current transactions as either an outside investor or an M&A practitioner.
Practical application of skills through cases studies will be provided through collaborative analysis before class, in-class discussions, a midterm and final exam.
With each class, there will be both 1) two or three assigned case studies for class discussion and 2) a topic for online discussion. Both will be accessible through Canvas as will all spreadsheet models and other analytic tools covered within the course.
To help formulate your thoughts on each assigned case study, you should prepare a brief memorandum addressing the principal issues (never to exceed one-page text plus supplemental exhibits). Though you will only be required to submit justone memorandum per week for grading, I encourage you to prepare one for each case.
While your Case Memos should be submitted to me by e-mail or Canvas,you should ALSO bring a printed copy to classfor reference during the discussions. After the cases are discussed in class, I’ll provide a summary review of the key analytical points to be used by your assigned class collaborator to evaluate your Case Memo and assign a grade of Honors, Admirable, Pass, or Fail. As a collaborator yourself, you will assess/grade the Case Memo of one other student each week.
The online discussions will be conducted through Canvas. Though they are strictly optional, they should prove interesting and enlightening. They also provide you the opportunity to enhance your class participation grade, and worthy contributions will earn their authors an extra credit point.
Note that all of these cases and online topics will be posted on Canvas a week before their due date, so you'll have substantial time to prepare your case memos following discussion with your assigned collaborator. If any of the problems are unclear to you, I am pleased to answer questions and provide guidance by e-mail, phone or consultation outside of class.
All PowerPoint presentations used with the lectures will also be posted after class on Canvas.
Due to the length and late hours of our schedule, the class will usually be divided into two segments, separated by 10 minute breaks. Generally, each segment will be devoted to a central topic, comprised of a brief PowerPoint presentation and a longer class discussion on the assigned case study.
Grading
Your grade will be determined as follows:
Weekly case memos20%
In-class participation 10%
Collaborator assessment 10%
Midterm 30%
Final Exam 30%
Following the midterm and prior to the final exam, I will sum all of your weighted scores on memos, class participation and exams. The totals for each person will be arrayed against those of the other class participants, and letter grades will be assigned according to the resulting curve.
Your class participation grade should be the easiest area in which to excel. When you arrive at class each session, you will start with an “A” (for "admirable") for the day, in expectation of competent class contributions. That grade, however, will drop if you demonstrate you are unprepared to discuss the assigned text and case materials (for example, not responding to a question, texting/cell phone use, surfing the web, or sleeping). Participation in online discussions will only improve your class participation grade, no matter how weak your contributions may be.
Also, each week, you will be assigned another student partner with whom you will collaborate on the analysis of the week’s case studies. Such collaborations may be completed by phone or in person, and they should be scheduled at a mutually acceptable time before each class. At the conclusion of the semester, you will be required 1) to submit a grade for each collaborator and 2) to rank them from best to worst. The assessments you receive from the other students will determine a significant portion of your overall class performance grade.
We will have one midterm examination, currently scheduled for the first session of the March 27 class. The midterm’s case study will be provided the prior week via Canvas, and you should prepare your write-up in advance for submission at the commencement of class. In addition, there will be a short-answer quiz for you to complete during class. Collaboration is NOT permitted for the midterm case study; and, during the class exam, you may NOT use your book, notes, or any electronic devices, including computers, Blackberries, or cell phones.
The final examination is scheduled for April 24. Like the midterm, it will be comprised of a case study (which will be posted on Canvas the prior week) and a short-answer quiz. The case study write-up should be prepared and submitted at the commencement of the exam period, during which the quiz will be administered.
I will assign a letter grade to both the midterm and final exams based on my independent assessment of your submissions; and your final grade will be based upon my assessment of all prior class evaluations, exams and contributions.
Textbooks and assigned readings:
- Robert F. Bruner,Applied Mergers & Acquisitions (John Wiley & Sons, 2004).
- Robert F. Bruner,Applied Mergers & Acquisitions Workbook(John Wiley & Sons, 2004)
- A variety of case studies, articles, legal documents and other materials will be made available via Canvas.
About Your Instructor
With almost three decades experience in business development and media acquisitions, I am privileged to have developed a wealth of real-world experience to share with the class. As a founding manager and Chief Financial Officer of Trader Publishing Company, I was integrally involved with its development into a $1.3 billion revenue enterprise. While there, I served as:
- Executive founder of AutoTrader.com, Traderonline.com, and ForRent.com-- national Internet services;
- Architect of the national network of localizedAuto MartandEmployment Guidemagazines, two free distribution magazine publishing groups;
- Founder of Vehicle Web Services, an Internet site hosting company;
- Acquirer of over 70 companies; and
- Creator of several business concepts which flourished or crashed and burned.
I received my MBA from the University of North Carolina/Chapel Hill (1980) and my AB degree in English from Duke University (1976). My book on the subject isMergers & Acquisitions Strategy for Consolidations: Roll Up, Roll Out and Innovate for Superior Growth and Returns(McGraw Hill, 2012)
Contacting Me
You are welcome to contact me if you encounter difficulties or wish to discuss some aspect of the course. I check e-mail most every morning, and you should not hesitate to call my cell (757-478-5569) at reasonable times. Though I keep no office hours, I would be pleased to schedule a session either before or immediately after one of my classes in accordance with your specific needs. Alternatively, we can schedule a meeting at a mutually convenient time and place.
Class summary
While providing a reasonably accurate overview of the course, this syllabus is subject to change as circumstances and events may make modifications necessary during the semester. This may depend on the progress, needs, and experiences of the students.
The topics and assignments for each class are as follows (please note that the enumerated readings pertain to the homework assignment to be completed before the indicated class):
Class 1 (February 13)
Session 1 Introduction: M&A Success Factors
Assignment:Bruner: Chapters 1
Workbook: pp. 8-10
Session 2 M&A Ethical Considerations
Assignment:Bruner: Chapters 2
Workbook: pp. 212-214
Excerpt fromAccordion Crimes(provided in class)
Session 3 Making Acquisitions Pay
Assignment:Bruner: Chapters 3-4
Workbook: pp. 11-20; 215-219
Class 2 (February 20)
Session 1 Acquiring to Add Value
Assignment:Bruner: Chapters 5-6
Workbook: pp. 21-37; 220-230
Kentucky Fried Chickenarticle
Case Study write-up 2.1
Session 2 Conditions for Optimal Success and Identifying Acquisition
Prospects
Assignment:Bruner: Chapter 7; and p 250 Ex 9.2
Workbook: pp. 38-41; 231-242
Summaries on acquisition identification
Session 3 Initiating Contact and Due Diligence
Assignment:Bruner: Chapter 8
Workbook: pp. 42-48; 243-244
Jeremiah Offset Presscase study
Case Study write-up 2.2
Class 3 (February 27)
Session 1 Acquisition Valuation Overview
Assignment:Bruner: Chapter 9
Workbook: pp. 49-55; 245-248
Christensencase study
Case Study write-up 3.1
Session 2 Discounted Cash Flow Valuation
Assignment: View Powerpoint on Discounted Cash Flow Model
Best Restorationcase study
Case Study write-up 3.2
Class 4 (March 6)
Session 1Best Restoration DCF-Revisited
Assignment: Best Restorationcase study
Discounted Cash Flow Evaluation review
Case Study write-up 4.1
Session 2 Valuing Synergies
Assignment:Bruner: Chapter 11
Workbook: pp. 60-65; 256-259
UAPcase study
Case Study write-up 4.2
Class 5 (March 13)
Session 1 Risk Management and Non-competes
Assignment:Bruner: Chapter 23
Workbook: pp. 122-127; 307-313
Job Market Newscase study
Case Study write-up 5.1
Session 2 Contingent Deal Payments
Assignment:Bruner: Chapter 22
Workbook: pp. 118-121; 307-313
Myriah Systemscase study
Case Study write-up 5.2
Class6 (March 20) VIRTUAL CLASS NO IN-CLASS SESSION
(Case Memo submission for extra credit is OPTIONAL)
Session 1 Highly Leveraged Valuation
Assignment:Bruner:Chapter 13
Workbook: pp. 72-78; 265-268
Deep Sea Tuna
Extra Credit Case Study write-up 6.1
Session 2 Deal Design
Assignment: Bruner: Chapter 18, 19
Workbook: pp. 99-108; 291-295
Session 3 Hostile Takeovers and Defense
Assignment:Bruner:Chapters 32 and 33
Workbook: pp. 177-182; 41-346
Microsoft-Yahoo Case Study
Extra Credit Case Study write-up 6.2
Class7 (March 27) Midterm Exam Case Memorandum Due
Session 1 Midterm short answer quiz
Session 2 Valuation Cautions
Assignment: Bruner: Chapter 12
Workbook: pp. 66-71; 260-264
Chryslercase study
Session 3 Financial Deal Components
Assignment:Bruner: Chapter 20
Workbook: pp. 109-113
Midtermcase study discussion
Class 8 (April 3)
Session 1 Employment and Consulting Agreements
Assignment:Bruner: Chapter 24
Workbook: pp. 128-131; 323-324
Marcel Publishingcase study
Case Study write-up 8.1
Session 2 Payment Form and Financing
Assignment:Bruner: Chapter 21
Workbook: pp. 114-117; 300-306
Auto Shopper Publishingcase study
Case Study write-up 8.2
Session 3 Transaction Process
Assignment:Bruner: Chapter 25, 30
Workbook: pp. 132-135; 171-173; 325; 328
Class 9 (April 10)
Session 1 Valuing Liquidity and Control
Assignment:Bruner: Chapter 15
Workbook: pp. 84-89; 276-282
21 Friendscase study
Case Study write-up 9.1
Session 2 Option Theory in M&A
Assignment:Bruner: Chapter 14
Workbook: pp. 79-83; 269-275
Mark Cuban’s M&A Risk Management Lessonscase
study
Case Study write-up 9.2
Session 3Negotiations and Transaction Documentation
Assignment:Bruner: Chapters 29 and 35
Workbook: pp. 146-170; 187-196; 331-337; 350-355
Letter of Intent sample
Class 10 (April 17)
Session 1 Auctions
Assignment:Bruner: Chapters31
Workbook: pp. 174-176;340-341
Homes.comcase study
Case Study write-up 10.1
Session 2 Tax Inversions
Abbvie Shirecase study
Session 3 Merger and Integration Implementation
Assignment: Bruner: Chapters 36-37
Workbook: pp. 197-205; 356-361
UAP Part IIcase study
Case Study write-up 10.
FINAL EXAMINATION April 246:00-10:00 p.m.