98769 - CORPORATE FINANCE

Learning outcomes

The student knows and understands, to a greater extent, national and international socio-economic processes, he/she is able to independently draw conclusions based on the collected data. He/she knows in-depth mathematical, statistical and qualitative research methods used in research in economic sciences and management sciences. He/she has in-depth knowledge of their use in the processes of analysis and inference in the field of international business.

Course contents

The course provides students with the theoretical foundations, methods and tools to understand and know how to apply investment choices, the estimation of a firm's cost of capital, and the valuation of a company. Furthermore, the course aims to provide the tools to understand and know how to implement the main investment banking/mergers and acquisitions (M&A) transactions and the process of listing a company on the stock exchange (initial public offering, IPO). Finally, innovations in the field of capital budgeting will be addressed through the presentation of the fundamentals of real options theory and its main applications.

 

PROGRAM

- The basics of theory of portfolio choices

- The pricing of risk and the Capital Asset Pricing Model (CAPM)

- The estimation of the firm’s cost of capital

- Company valuation techniques (Discounted Cash Flow, Market Multiples)

- Mergers & Acquisitions:

• The buy-side and sell-side acquisition process: fundamentals of structuring an M&A transaction
• The transaction schemes: direct negotiation vs. public auction
• Synergies: types, life cycle, valuation
• Estimating the control premium and the strategic value of the company
• The payment terms of acquisitions: cash vs. shares
• The determination of the offer price
• The earn-out mechanism

- The going-public decision: the initial public offering (IPO)

- The leveraged buyout (LBO)

- Advanced capital budgeting: Real Options Theory and Real Options Applications

Readings/Bibliography

Robert Bruner. Applied Mergers and Acquisitions. 2004. Wiley Finance

Aswath Damodaran. Investment Valuation. Third Edition. Wiley Finance

Teaching methods

Lectures, applications and case studies

Assessment methods

Presentation of a business case using models, tools and concepts covered in the course lectures. Students will be divided into groups. Each group will work on a business case chosen during the semester. The group will present the solution of the business case to the instructor on the day of the exam. Each student will receive as a final grade the grade awarded by the instructor to the group of which the individual student is a member. The final grade awarded to the group will depend on the performance achieved by the entire group in the work conducted on the business case. Performance is therefore the result of collective work, to which the contribution of each individual member makes an important contribution.

The grades will indicate the following levels of preparedness:

● < 18: insufficient

● 18-23: sufficient

● 24-27: good

● 28-30: excellent

● 30 cum laude: excellent

Registration on Almaesami is required for taking the exam.

Teaching tools

Lecturer's slides, Excel files (models), case studies (slides and solutions). Teaching materials will be uploaded on Virtuale (virtuale.unibo.it).

Office hours

See the website of Francesco Baldi