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25735 Mergers and Acquisitions

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2019 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

Requisite(s): 25765 Corporate Finance
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.
Anti-requisite(s): 25807 Mergers and Acquisitions

Description

This subject looks at all aspects of the mergers and acquisitions (M&A) and restructuring process. The first seven lectures address M&A deal rationale, valuation and structuring issues. The remaining lectures address specific types of M&A deals and restructuring transactions. Topics covered include reasons for takeovers, business and acquisition plans, implementation of takeover plans, valuation in the takeover context, regulation of takeovers, deal structuring issues, private equity and leveraged buyout (LBO) transactions, takeover of privately-held firms, alternative exit and restructuring strategies and cross-border mergers and acquisitions. Legal and tax aspects of mergers and acquisitions are also examined.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. construct a framework to analyse company mergers
2. evaluate the costs and benefits of mergers and acquisitions
3. apply the financial techniques involved in assessing the merits of mergers and acquisitions
4. discuss the legal and taxation aspects of mergers and acquisitions

Contribution to the development of graduate attributes

This subject provides students a framework to think about mergers and acquisitions. Students will learn about the strategic drivers of mergers and the various stages of an acquisition process. Students will also learn to evaluate a potential acquisition target and to assess deal structuring issues including legal, accounting and tax issues. This subject also contributes specifically to the following program learning objectives:

  • Be able to access and critically analyse relevant information for business decisions (1.1)
  • Apply complex business concepts taking into account the broader environmental context (1.2)
  • Apply technical skills necessary for professional practice (5.1)

Teaching and learning strategies

The subject will be taught using a combination of lectures and workshops. Lectures will introduce and elaborate on the relevant concepts and workshops will provide the students the opportunity to apply these concepts. Students should read the lecture slides before each lecture to be able to participate in class discussions and to contribute to the learning environment of the class. For the workshops, students will prepare short answers for workshop questions at home, and the workshop questions will be used to have class discussions during the workshop. Written answers to workshop questions will not be provided, so each student should prepare his/her own answers before class, and add to those answers from the workshop discussions.

Lectures and workshops will be supplemented with both printed and electronic learning materials and resources. UTS Online will be used to share information and to encourage interaction between staff and students. Students will also use appropriate computer software such as Excel and Word and relevant financial databases to complete assigned tasks. Students will work on the individual assignment on their own but they may have discussions with the lecturer and other students regarding the assignment during the workshops.

Flipped Learning: Some relevant videos will be made available to the students before class, and students should be prepared to discuss these in the lectures and the workshops. Similarly, some topical newspaper or journal articles or links to these articles will be included in the lecture slides and tutorials, and students should be prepared to discuss these in class. These videos and articles will bridge the gap between academic theories and practice.

Assignments: There will be two assignments over the semester to help students assess their learning and progress. The first assignment will be an individual assignment and the marked assignment with comments will be turned to the student to provide early feedback. The second assignment will be a group assignment. This will involve students collaboratively analysing a potential takeover decision by an ASX-listed company and producing a written report of their analysis. These assignments will allow students to gain valuable experience in applying their subject learning in the real-world context. Students are expected to work on the group assignment collaboratively and each member should review the drafts of the work of other members, provide appropriate feedback, and be prepared to help out other members with issues they are struggling with. Please consult the group assignment guidelines for further details on how the group assignment work should be planned and organised among the group members.

Content (topics)

  • Economics of mergers and acquisitions and reasons for takeovers
  • Strategy, business and acquisition plans and the acquisition process
  • Valuation in the context of mergers and acquisitions
  • Regulation of takeovers and common takeover tactics and defences
  • Deal structuring process: form of payment, form of acquisition and tax and accounting considerations
  • Restructuring of ownership and assets
  • Leveraged buyouts (LBOs) and private equity
  • Cross-border mergers and acquisitions

Assessment

Assessment task 1: Assignment 1 (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2 and 3

Weight: 15%
Length:

1-2 pages for each write-up.

Criteria:

The assignment write-ups will be marked on the quality of the analysis, the soundness of the arguments and the effectiveness in applying the relevant conceptual framework in analysing a takeover deal.

Assessment task 2: Assignment 2 (Group)

Objective(s):

This addresses subject learning objective(s):

1, 2 and 3

Weight: 25%
Length:

The “pitch book” may contain up to 30 slides (pages).

Criteria:

The assignment will be marked on the quality of the analysis, the soundness of the arguments, the quality of the presentation, and the effectiveness in applying the relevant conceptual framework in analysing a takeover deal.

Since your group will not actually present the report, you need to be specific in your writing: provide sufficient detail to understand the point you are trying to make. Statements should be supported by evidence.

Assessment task 3: Final Exam (Individual)

Objective(s):

This addresses subject learning objective(s):

2, 3 and 4

Weight: 60%
Criteria:

Accuracy of answers, soundness of discussions and ability to apply business concepts to practical problems.

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Required texts

DePamphilis, Donald. Mergers, Acquisitions, and Other Restructuring Activities; Academic Press; 8th edition; 2015.

The hard copy of the textbook is available at Zookal.com (ISBN: 9780128013908):

https://www.zookal.com/mergers-acquisitions-and-other-restructuring-activities-8th-edition-9780128013908/

The soft copy of the textbook is available via UTS Library: http://find.lib.uts.edu.au/?R=OPAC_b2985975

Recommended texts

The additional readings suggested below are for students who wish to achieve a more detailed understanding of the concepts covered in this course.

  • Bruner, R. Applied Mergers and Acquisitions. John Wiley & Sons Inc.; 2004.
  • Koller, T., Goedhart, M. and Murrin, J. Valuation: Measuring and Managing the Value of Companies. John Wiley &Sons Inc.; 5th edition; 2010.
  • Rosenbaum, J. and Pearl, J. Investment Banking. Wiley Custom Learning Solutions;2nd edition; 2013.
  • Peirson, G. et al. Business Finance. McGraw-Hill; 12th edition; 2015.
  • Faculty of Business (2014), Guide to Writing Assignments, available at:

http://www.uts.edu.au/sites/default/files/business-writing-guide-2014.pdf

Other resources

I would strongly recommend reading the follwoing books:

1. A highly entertaining and instructive account of a high profile M&A contest from the 1980s:

Bryan, B. and Helyar, J. Barbarians at the Gate: The Fall of RJR Nabisco. HarperCollins Publishers; 2009.

2. A detailed history of M&As up to the beginning of the 2000s:

Wasserstein, B. Big Deal: Mergers and Acquisitions in the Digital Age. Business Plus; 2001.