UCL School of Management

Module Fact Sheet

MSING035: Mergers & IPOs


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This is a past version of this module for MSING035 16/17.
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Taught by
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)
2 coursework assignments worth 50% each

Course overview

This course extends and deepens the value-based approach to finance-related diagnosis and decision-making introduced in Term 1 in the MSING027 Corporate Finance course.

Specific focus in this course is on two topics of very high visibility and importance in today’s business world: mergers (M&A) and initial public offerings (IPOs). This course’s perspective is that of principals (buying or listing trade companies) and their continuing shareholders.

M&A represents a primary growth approach for many firms, and consolidation is progressing in two dozen sectors worldwide. IPOs represent the primary means by which new emerging firms access significant equity funds whilst also become publicly-traded entities. There are many successes in both, but also the opposite: historically, around two-thirds of all mergers fail, while poorly planned and priced IPOs may leave the company worse off than if no financing had occurred at all.

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

100% of the mark for this module is based on the assessment of the two 1,500 word papers (each worth 50%). All students write on the same topic, which is revealed by the course leader at Weeks 5 and 10. Topics are selected from one of the four major topics addressed in each half of the course. Each paper is strictly an individual effort (no group-work permitted).

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 Friday, 27 September 2019