B2812 - Valuation, Merger and Acquisitions

Learning outcomes

This course is structured in two parts. The first part of the course is dedicated to the nature of the variables determining the enterprise value and how they can be maximized. At the end of the course, the student will be able to: - use the main corporate valuation methods, such as discounted cash flow and relative valuation, along with the estimation practices for computing their inputs; - critically apply these methods as research evidence recommending specific valuation procedures depending on different corporate operations. In the second part, students are introduced to extraordinary finance operations, i.e., Mergers and Acquisitions (M&As). This part is designed to introduce students to the financial and contractual aspects that characterize extraordinary finance operations and their application. At the end of the course, students will be able to analyse the main corporate control transactions, such as mergers and acquisitions, spin-offs, carve-outs, leveraged buyouts and turnaround operations, in the light of the value creation to shareholders principle

Course contents

Part One: The detailed program (Valuation)

• 1-Introduction to finance and financial valuation
• 2-Estimating Cost of Capital
• 3-Choosing the Valuation Perspective
• 4-The impact of Financial Leverage
• 5-Estimating Cash Flows
• 6-Estimating growth rates
• 7-The synthetic assessment procedure
• 8-The Analytical valuation Process
• 9-Valuation with multiples: theoretical aspects
• 10-Valuation with multiples: practical aspects

Part Two: The detailed program (M&A)

• 1-Theoretical framework
• 2-M&A process and activities
• 3-The importance of due diligence
• 4-Valuation for extraordinary finance operations
• 5-Deal structuring and financial strategies
• 6-The importance of post-merger integration
• 7-The main causes of over-investment

Readings/Bibliography

Primary Textbooks

• 1-Aswath Damodaran, Dark Side of Valuation, The: Valuing Young, Distressed, and Complex Businesses, (2018).
• 2-Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions, 9th edition, Donald M. DePamphilis, Elsevier/Academic Press, San Diego, Ca., 2014

  Other supplementary sources

• 3-Massari, Villani, and Zanetti, “Valutazione:” Egea, 2022.
• Valuation guide by borsa italiana: Guide:https://www.borsaitaliana.it/borsaitaliana/pubblicazioni/pubblicazioni/guidaallavalutazione.pdf
• 4-Applied merger and acquisitions, Robert F. Bruner, Wiley Finance, 2004
• 5-Mergers & acquisitions integration handbook, Scott C. Whitaker, Wiley finance, 2012

Teaching methods

1- Classes by the professor explaining the contents of the course.

2- Excel lab to practice financial modeling

3- A dedicated tutor.

4- "L'insegnamento partecipa al progetto di sperimentazione didattica dell'Ateneo” tramite il crash course in Finance

Assessment methods

The evaluation process

A written exam: multiple-choice questions + exercises

A practical case on a listed company valuation.

A practical case on analyzing extraordinary finance transactions.

Scoring grid:

• 18-23: sufficient preparation and analytical skills on a limited number of topics covered in the course.
• 24-27: adequate preparation and analytical skills but with some limitations; good operational skills, even if not particularly articulated.
• 28-30: very good knowledge of many topics covered in the course; good operational and critical skills.
• 30L: excellent and exhaustive knowledge of the topics covered in the course; critical analysis and connection skills.

Students are not allowed to use notes or books.

The final mark is expressed out of 30.

Teaching tools

A dedicated MS-Teams class will be created to facilitate the communications and for receiving students.

online lectures when is needed

Office hours

See the website of Murad Harasheh

See the website of Tiziano Pacetti