5.11. Summary of the Specialization. Overview of the Project

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From the course by Moscow Institute of Physics and Technology

Mergers and Acquisitions – The Relentless Pursuit of Synergy

4 ratings

Moscow Institute of Physics and Technology

Mergers and Acquisitions – The Relentless Pursuit of Synergy

4 ratings

Course 4 of 5 in the Specialization Understanding Modern Finance

The area of mergers and acquisitions (M&As) is special in finance. Incredible amounts of money are employed in such transactions. Deals draw a lot of public attention and dispute. Oftentimes, stories look more like fairy tales rather than financial reality. The key idea in any M&A transaction is to create value through a potentially synergetic activity. To this end, it is important to have a clear motive and implementation plan. Of special importance are the correct valuation, proper financing, and actual deal completion. But this is not the end – value mostly accrues from the post-merger integration. The understanding of the motives of various stakeholders is instrumental in the analysis of the potential creation of value. The learners will gain insight into the core value creating M&A strategies. They will be able to use the obtained knowledge and skills to successfully advance in their career at a financial institution, as well as in the area of financial management at non-financial businesses. Finally, the Course is very helpful in successful completion of the Specialization’s Final Project.

From the lesson

Value-Creating Strategies. Anti-Takeover Defenses. Corporate Governance and Performance. Conclusions – the Relentless Pursuit of Value

Week 5 – the final week of the Course – focuses on the details of value creating strategies. We start with share repurchases and their effect on value. Then we analyze anti-takeover defenses as value creating strategies. We proceed with the discussion of corporate governance. Although in M&As this concept has somewhat narrower meaning, we try to relate the advantages and costs of a well-functioning and efficient corporate governance system to the development of the M&A market. On a specific example we analyze the potentially value-destroying conflicts that may arise from the underdeveloped corporate governance system. Finally, we identify the role of post-transaction merger integration in the creation of value. We provide some conclusions on M&A efficiency and synergy. At the very end, we summarize the Course and the Specialization and briefly discuss the Final Project.

5.1. Value creating strategies4:45

5.2. Share repurchases. Fixed-price tender offers14:29

5.3. Anti-takeover defenses (1) – returns to bidders and targets10:10

5.4. Anti-takeover defenses (2) – pre-offer defenses8:41

5.5. Anti-takeover defenses (3) – post-offer defenses9:24

5.6. Corporate governance in the US – an overview18:14

5.7. Corporate governance in other countries – who will pay?9:59

5.8. An example of corporate governance – Russian preferred shares9:19

5.9. Implementation and integration – key to success5:16

5.10. Some conclusions – the relentless pursuit of synergy7:28

5.11. Summary of the Specialization. Overview of the Project5:46

Meet the Instructors

Konstantin Kontor
Director and Professor of Finance and Strategy
American Institute of Business and Economics (AIBEc)

Well, my congratulations.

We've reached the very final episode of this course and the whole specialization.

And this is the time to come up with a short summary

and to discuss what you are to do next,

and how you'll be able to use what you've been fighting

with and what you've been accumulating throughout this course.

Well, first of all, it's been really a long road,

but we've tried to identify value as a key idea and concept of modern finance.

Well, there are some challenges on this path.

For example, right now, people say,

"Well, value is immaterial."

You can see a lot of companies whose market prices for the stock are so huge,

and they say that they never produced enough cash flow.

But again, this is a story that maybe value is not being produced by cash flows only,

so that is not a challenge.

That just attests to the fact that it's always kind of difficult

to pinpoint what exactly value means for this or that group of stakeholders.

We've seen quite a few stages and that specialization has been multidisciplinary.

We looked at value at different angles.

And we've seen many examples.

And I do hope that we've learned quite a few lessons.

So, that's been quite a journey.

And now, this is sort of a wrap-up of what we've done.

So, we started with capital markets and we've seen the big picture.

The role of financial institutions and also we've seen some financial instruments.

That was quite interesting and covering some pretty advanced issues.

But the result was sort of the understanding of the field in which we operate.

Then we moved to corporate finance that deals mostly with models, models of value,

models of risk and return,

and models of these option-like and derivative things.

And we said that,

here we see that we made a huge leap frog,

but at the same time we have recognized the potential gap between models and reality.

And then we moved to accounting both financial,

managerial, to see that these gaps may be bridged.

And then in the open and sometimes quantifiable way,

we talked about numbers and people.

So, how the combination of these two contributes to the potential value creation.

And we saw that it's not enough to say that people do contribute.

We've tried to develop certain approaches that can be either

quantified or at least put within the overall approach to value.

And all that we sort of used in our analysis

of M and A as value creating strategies and stakeholders interests'.

So, we used this field not only as a peak of corporate strategy,

but also as a very nice area where we

could apply all the knowledge that we have accumulated.

And now comes the final message here.

Again, this specialization is entitled,

"Understanding More Than Finance."

So, our advancement was in this understanding.

Although sometimes the actual things that we did look,

the very much well-known,

but we tried to go deeper and reveal the core issues and the links between them.

And that is what makes this specialization somewhat advanced,

and that is why we position it that way.

And here comes the time for the very final piece of the flip chart.

We are not yet done.

You guys are still to complete the project.

And again, this project,

there you will be able to practically apply what you've learned throughout this course,

everything, use what you've studied.

It will be comprehensive.

But I will provide specific guidelines

for you also in the form of handouts and some video pieces,

that is also part of this specialization.

Well, now it's time for me to thank you all,

first of all, for your time,

efforts, and also for your patience.

Because it's been a long road and it did require accommodation to what I'm doing here,

sometimes you might easily dislike that.

But those who have reached this point,

they traveled this road together with me.

I do appreciate your company on this path,

and I do appreciate your contribution.

I wish you all good luck in whatever you do in your career and life.

And I do hope that the accumulated knowledge of capital markets and

this deep understanding of how they interact will assist you in your efforts.

Thank you. Goodbye. And good luck.

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