UCL School of Management

Module Fact Sheet

MSIN0111: Mergers, Divestments and IPO Analysis

Taught by
Masters, level 7
Yes, MSIN0149 Corporate Finance.
MSc Finance students only
Delivery method
3-hour lecture (x 5 weeks)
Group coursework 30%
Exam (2 hours) 70%
Previous Module Code

Course overview

This topical, theoretical course provides a value-based diagnostic approach to mergers, divestments (inclusive of break-ups, spin-offs and disposals), and Initial Public Offerings (“IPOs”). The perspective is that of senior financial and executive management of the principal firms directly involved in decisions involving these three types of interrelated transactions. Especially with evolution of “merger valuation” in recent decades, principals’ perspectives often differ materially from those of bankers, advisors and other transaction intermediaries. But all merger parties benefit from a deep understanding of the financial community’s preference M&A analysis-evaluative method.

For example, in the MERGERS major part of this course (comprising 3 of the 5 three-hour lecture sessions), we investigate Best Practice prevailing methodologies and techniques for maximising probabilities of M&A ‘success’ as indicated by financial objectives of continuing shareholders of the acquiring firm. Especially as ‘Two-thirds of All Mergers Fail’ is not merely a pundit’s phrase but rather, proven fact, buyers’ keys to M&A proficiency focus on exacting analysis of three factors in particular: premium paid, synergies achieved, and timing.

Whilst some DIVESTMENTS (1 of the 5 three-hour lectures) are de-mergers necessitated by earlier M&A deal failure, this is not the only source of such transactions. If ‘1 + 1 = 3’ is the rallying call of mergers, break-ups tend to be rationalised by the opposite: ‘1 = 1 + 1 + 1 (total 3)’, or in the proclamation from spin-off/break-up advocates, ‘The sum of this corporation’s parts is worth more than the whole.’

IPOs (1 of the 5 three-hour lectures) are often the issuing corporation’s largest single equity infusions and thus are of high importance to those companies’ financial management, particularly at younger firms seeking competitive investable funds advantage. IPO cycles are closely related to merger waves, or cycles, for reason. Competing parties and interests vie in setting the IPO Day One launch price, which based on recent years’ IPOs (including but not limited to Twitter, SNAP and Blue Apron) often differ significantly from subsequent public market valuations of those firms.

Learning outcomes

Upon successful completion of the module, students will:

  • Develop a practical understanding of today’s leading ‘merger valuation’ methodologies (Q: Is this deal successful from the perspective of the shareholders of the acquiring company?) as contrasted with mere M&A motivations
  • Comprehend the cyclical nature of merger waves, and how knowledge of the four phases comprising each cycle may help improve acquirer M&A effectiveness and success
  • Re Merger segmentation: Learning how to enhance M&A performance though category & characteristic selectivity
  • Re Synergies: Understanding, applying a comprehensive approach to postmerger improvements essential for the deal to be financially viable
  • Differences between ‘price’ and ‘value’ (company worth), especially as these relating to IPO planning & launches
  • Diagnosing break-ups (“BUs”) from an independent, knowledgeable perspective of whether the proposed transaction should proceed (Q: Have the touts for BU considered all of the critical considerations, in correct manner?)

Topics covered

  • Merger valuation (MV): determination of M&A success & failure
  • Merger waves: Getting M&A timing right
    • Basics of merger segmentation (identification of most successful merger types, characteristics)
    • 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?
  • IPOs I: Price set v market value
  • IPOs II: Issuing company FD’s dilemmas

Assessment summary

Group coursework 30%. Exam (2 hours) 70%

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

Essential reading


Clark, Peter and Mills, Roger M (2013.). Masterminding the Deal: Breakthroughs in M&A Strategy and Analysis,

London, Kogan Page, ISBN 978-0-7494-6952-8  E-ISBN 978-0-7494-6953-5.

Other limited articles and papers will be provided via the course’s Moodle, one week prior to the lecture session assigned for completion.

Past versions of this module

MSING072 17/18

Last updated Monday, 10 September 2018