M&A and Advanced Valuation
Academic Year 2022/2023 - Teacher: Oliviero ROGGIExpected Learning Outcomes
Objectives
The objective of this course is to develop a detailed understanding of the tools used by market professionals (Equity analysts) and corporate managers to estimate the value of companies and stocks using public data. The central theme of the course will be the pricing of equity securities using relative valuation procedures and option pricing models. After completing the first part of 6 CFU, students should be able to:
a. Identify and interpret the key value drivers for a firm or industry.
b. Identify and interpret accounting and non-accounting information necessary for valuation.
c. Develop quantitative models for firm and equity valuation based on markets multiples.
d. Critically analyze firm and equity valuation models and assumptions developed by others in equity reports or experts’ opinion or testimony and special situation such as M&A, Scissions.
The final part of the course (3 CFU) is based on seminaries on case studies in merger and acquisition and other related topics. The seminars are taught in collaboration with practitioners working in the Finance Industry. This last module will provide students with an in-depth understanding of the M&A process and advanced valuation techniques used in merger and acquisition. Students will learn about the key factors that drive M&A activity, including strategic rationales, financing instruments and risk environment.
Required Prerequisites
Attendance of Lessons
Rules of Engagement
- Rules of group work:
- Pick your own groups.
- All group work will be self-policed, except in extreme circumstances.
For further rules of engagements, grading policies and honor code please refers to the UNIFI Website.
Attendance
Class attendance is essential to your success in this course. In class interaction and examples enrich the hands-out and the book materials and it allows you to have a better understanding of the discipline. The signature on the periodically circulated attendance roster will determine attendance. Students with low (<60%) attendance will be considered and non-attendants and asked to pass the oral exam in the regular exam sessions.
Detailed Course Content
M&A and Advanced Valuation | |||||
Settimana | data | Ore | Tema | Materiali | |
1 | 06/mar | 2 | Introduction to the course contents, materials and exams | Slides set: Intro | |
07/mar | 2 | Motives in M&A and Valuations issues | Slides set: Intro | INVVAL 1,2, 17 | |
09/mar | 2 | Reprise DCF Part 1 | INVVAL 7,8,9,10,11,12 | ||
2 | 13/mar | 2 | Reprise DCF Part 2 | INVVAL 7,8,9,10,11,13 | |
14/mar | 2 | Reprise DCF Part 3 | INVVAL 7,8,9,10,11,14 | ||
16/mar | 2 | Intro to Relative Valuation | Slides set S05 part 1 | INVVAL 17 | |
3 | 20/mar | 2 | Relative Valuation – Price earnings ratio Part 1 | Slides set S05 part 1 | INVVAL 18 |
21/mar | 2 | Relative Valuation – Price earnings ratio Part 2 | Slides set S05 part 1 | INVVAL 18 | |
23/mar | 2 | Relative Valuation – EBITDA/EV and Variants | Slides set: S06 | INVVAL 18 | |
4 | 27/mar | 2 | Relative Valuation – Price to book and other multiples Part 1 | Slides set | INVVAL 19 |
28/mar | 2 | Relative Valuation – Price to book and other multiples Part 2 | Slides set | INVVAL 19 | |
30/mar | 2 | Relative Valuation – Revenues Multiples and sector specific ratios | Slides set | INVVAL 20 | |
5 | 03/abr | 2 | Statistical tools for valuation part 1 | Slides set | Materials provided by the guest lecturer |
04/abr | 2 | Statistical tools for valuation part 2 | Slides set | ||
05/abr | GROUP WORK ON RELATIVE VALUATION - START | ||||
06/abr | INTERRUZIONE PASQUALE | ||||
6 | 10/abr | ||||
11/abr | |||||
13/abr | |||||
7 | 17/abr | 2 | The Option to deal and Valuation Implication | Slides set | INVAL 28 |
18/abr | 2 | The Option to Expand and to abandon: Valuation ImplicationThe Option to Expand and to abandon: Valuation Implication | Slides set | INVAL 29 | |
20/abr | 2 | Reading and comprending an Equity Report | Slides set | Materials will be provided during the class | |
8 | 24/abr | 2 | Reading and comprending an Fairness Opinion | Slides set | Materials will be provided during the class |
25/abr | 2 | IN CLASS GROUP WORK - Tutorship Part 1 | |||
26/abr | 2 | IN CLASS GROUP WORK - Tutorship Part 2 | |||
9 | 01/mai | Festa del Lavoro | |||
02/mai | 2 | Aquisitions and Takeovers | Slides set | INVVAL 25 | |
04/mai | 2 | Aquisitions and Takeovers | Slides set | INVVAL 25 | |
05/mai | DEAD LINE GROUP WORK ON RELATIVE VALUATION | ||||
10 | 08/mai | 2 | Seminar Astolfi 1 - M&A market overview | Slides set | Materials provided by the guest lecturer |
09/mai | 2 | Seminar Astolfi 1 - M&A market overview and Simulation Intro | Slides set | Materials provided by the guest lecturer | |
11/mai | 2 | Simulazione HBR Wine or Seminar | TBA | Luehrman, Timothy A., and W. Carl Kester. "Finance Simulation: M&A in Wine Country: No. 3289." Simulation. Watertown, MA: Harvard Business Publishing, 2009. Electronic. | |
11 | 15/mai | 2 | Seminar Astolfi 2 - Acquisition Finance Equity instruments | Slides set | Materials provided by the guest lecturer |
16/mai | 2 | Seminar Astolfi 2 - Acquisition Finance Equity instruments | Slides set | Materials provided by the guest lecturer | |
18/mai | 2 | Seminar 3 online - Initial Public Offering | Slides set | Materials provided by the guest lecturer | |
12 | 22/mai | 2 | Seminar Astolfi 4 - Leverage Buy Out & IPO | Slides set | Materials provided by the guest lecturer |
23/mai | 2 | Seminar Astolfi 4 - Leverage Buy Out & IPO | Leverage Buy Out & IPO | Materials provided by the guest lecturer | |
25/mai | 2 | Final Frequentanti |
Textbook Information
Required Material
Lecture Note Packets: The hands-out will be available through the web platform Teams
Text Book: Investment Valuation, Third edition (John Wiley & Sons). Investment Valuation is the reference book.
Author | Book | Description | Website |
Aswath Damodaran | Investment Valuation (3rd Edition) | It has almost all of the material of the class (barring the more recent updates) and has problems at the end of every chapter. It follows the standard script of valuation, looking at different valuation models with twists. | http://www.wiley.com/WileyCDA/WileyTitle/productCd-1118130731.html |
Course Planning
Subjects | Text References | |
---|---|---|
1 | Introduction to the course contents, materials and exams | |
2 | Motives in M&A and Valuations issues | Slides Intro + INVVAL 1,2, 17 |
3 | Reprise DCF Part 1 | INVVAL 7,8,9,10,11,12 |
4 | Reprise DCF Part 2 | INVVAL 7,8,9,10,11,12 |
5 | Reprise DCF Part 3 | INVVAL 7,8,9,10,11,12 |
6 | Intro to Relative Valuation | INVVAL 17 |
7 | Relative Valuation – Price earnings ratio Part 1 | Slides set S05 part 1 + INVVAL 18 |
8 | Relative Valuation – Price earnings ratio Part 2 | Slides set S05 part 1 + INVVAL 18 |
9 | Relative Valuation – EBITDA/EV and Variants | Slides set: S06 INVVAL 18 |
10 | Relative Valuation – Price to book and other multiples Part 1 | Slide set + INVVAL 19 |
11 | Relative Valuation – Price to book and other multiples Part 2 | Slide set + INVVAL 19 |
12 | Relative Valuation – Revenues Multiples and sector specific ratios | Slide set + INVVAL 20 |
13 | Statistical tools for valuation part 1 | Slide set |
14 | Statistical tools for valuation part 2 | Slide set |
15 | The Option to deal and Valuation Implication | Slide set + INVVAL 28 |
16 | The Option to Expand and to abandon: Valuation Implication | Slide set + INVVAL 29 |
Learning Assessment
Learning Assessment Procedures
Exams and grading:
The grading is based on the class participation and presentation, group work and midterm exam. The final exam will be scheduled on May (exam week) or in the regular exams sessions.
Class Participation & Cases (group work, maximum 5 students per group) | Relative Valuation Group work
| 50% | To obtain the 20% of the final grade, students must actively participate to the HBR Wine Country Simulation. There will be no grade but active participation is responsible for the 20% of you final grade. To obtain 30% of the final grade, students must organize in group and submit the Relative Valuation report before the deadline. In case of unjustified absence at the Simulation and without submitting the relative valuation report, students will be evaluated through the final exam only (100% of the final grade) |
HBR Finance Simulation: M&A in Wine Country (group work)
| |||
Final exam | Practical problems and T/F questions
| 50% | Date and timing will be announced during the course |