UCL School of Management

Module Fact Sheet

MSIN0085: Mergers & IPOs

Taught by
Masters, level 7
Corporate Finance (CF) MSING027
MSc Management Route B, Finance pathway only
Term 2
Delivery method
2-hour lecture (x 10 wks) immediately followed by 1-hour workshops (x 9 wks)
Individual coursework 50%, two hour unseen test 50%
Previous Module Code

Course overview

This theoretical (non-quantitative) module addresses two issues of elevated importance to both financial officers and advisors-consultants, as well as financially-oriented general business students: Initial Public Offerings (IPOs) and merger / demerger valuation. IPOs typically represent the firm’s largest single equity source: capital to support company growth and expansion. The IPO portion of this module reflects a Best Practice Company Valuation - (Discounted Cash Flow) - guided perspective, considering some of the major valuation and pricing challenges encountered by the listing company before, during and shortly after IPO Launch Day. Merger Valuation involves a central issue in acquisition analysis today from the perspective of the potential or actual buying firm - is this deal financially viable? This examination is primarily based on the leading synergy-versus-premium methods in use today. De-mergers (such as spinoffs and break-ups) represent a growing area of importance in dynamic corporate strategic management, particularly in changing economic times; this module considers financial assessment and some other key aspects of this topic area. M&A cycles and some key merger defence tactics are also included in this module.

Learning outcomes

Upon successful completion of the module, students will:

  • Develop a practical understanding of today’s leading ‘merger valuation’ (Is this deal successful from the perspective of the shareholders of the acquiring company?) methodologies

  • Comprehend the cyclical nature of merger waves, and how knowledge of the four phases comprising each wave may help improve acquirer (as well as seller) M&A effectiveness and success

  • Merger segmentation: learn how to enhance M&A performance though target and combination type selectivity

  • Synergies: understanding and applying a comprehensive approach to the key to most merger’s success or failure

  • Differences in ‘price’ versus ‘value’, especially as relating to Initial Public Offering launches

  • Comprehend both the use and misuse of: multiples in company and merger analysis, spin-offs and break-ups, reliance on ‘financial restructuring’ (leverage) in mergers

Topics covered

  • Merger valuation (MV) as differentiated from corporate valuation, MV criteria

  • Merger waves: getting the timing right

  • Basics of merger segmentation

  • Reasons for historical M&A failure, possible remedies

  • Synergies v bid strategy: Is this deal value-creating?

  • Break-ups, spin-offs and their advocates: creating or destroying value?

  • M&A fallacies, takeover defences

  • IPOs I: Price v value

  • IPOs II: The FD’s dilemmas

Assessment summary

Individual coursework 50%, Two hour unseen test 50%

Current students should refer to Moodle for specific details of the current year’s assessment.

Essential reading

Clark, Peter J. and Mills, Roger M. (2013). Masterminding the Deal: Breakthroughs in M&A Strategy and Analysis, Kogan Page, ISBN 978-0-749469528

Past versions of this module

MSIN0085 18/19

MSING035 17/18

MSING035 16/17

Last updated Wednesday, 26 June 2019