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From the course by Moscow Institute of Physics and Technology

Mergers and Acquisitions – The Relentless Pursuit of Synergy

1 оценка

Moscow Institute of Physics and Technology

Mergers and Acquisitions – The Relentless Pursuit of Synergy

1 оценка

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

Why M&As? Stakeholders, Framework and Process. Legal and Regulatory Environment. Accounting and Tax Issues an Overview

In Week 1 we paint the big picture of the M&A field. We identify the value creation as the key motive behind these deals. In order to analyze the value creation process, we introduce the stakeholders’ approach and study stakeholders’ motives in some detail. Then we discuss the idea of synergy as the core objective of a successful M&A transaction and its pitfalls. We introduce the framework and process of M&As and discuss the overall environment of these transactions – legal and regulatory issues (especially, antitrust motives), accounting treatment of M&As, and some important tax considerations. We will see how the transaction environment and treatment influence the potential of successful implementation of a transaction and the corresponding value creation.

Introduction4:00

Meet the Instructors

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

Hi, I'm Konstantin Kontor,

Director and Professor of Finance at

the American Institute of Business and Economics in Moscow.

And now I'm offering to you my course in Mergers and Acquisitions.

This is the final course or specialization of the standing moral in finance.

So, we've finally reached this point when this is

something that is the end of the long path.

Now, the area of M&A is really the area of fairy tales.

You know it's funny, but we can say that the modern version of

a Cinderella story that was shown in the famous Pretty Woman movie.

In this movie, the main hero is not the prince.

He's a professional in the M&A area.

So, this is the activity in which we talk about incredible amounts of money that

sometimes fairy tales are developing and oftentimes dreams both come true,

and then they result in complete disasters.

So, this is also the area of lots of

exotic buzzwords and it does attract a lot of attention of the journalists,

and other people who are very far from finance.

Well, we in our studies of M&A's,

we pursue the same idea of understanding.

And on this path by now,

we are armed if you will with our faithful warriors,

the models, and the approaches from the previous courses that we've studied,

capital markets, corporate finance, and accounting.

So, it is with these helpful members

of our team that we'll be able to properly analyze M&A's transactions.

Because M&A's cannot be studied without the stakeholders' paradigm,

and here both capital markets and majorly accounting they come into play.

The central topic in M&A's is evaluation and will be helped

by our corporate finance models that we talk about raising capital.

Again, we know something from capital markets failed to do so.

So, this is finally the thing which will be able to sort of build up on what we

already know and the most important thing to keep in mind is that in M&A's,

we have to engage in many activities each of which is sort of

necessary but none of them actually ensure success.

So, you have to do many, many things,

and do them all the right way and maybe the chance of success goes up.

So that always allows us to keep in mind that it's easy to

fall in the trap of making arrogant judgments like these people failed,

those people committed the blunder.

But it's much more interesting task to analyze what caused

the potential successes of failures and we will

see that we'll be able to make well-balanced,

professional, and independent judgments about the potentially value-creating strategies.

As always, we have to put together all this and

see how that influences our life beyond business and beyond finance.

And well, to the extent we are in fairy tales,

we are dealing with something that gives us

some if not recipes but at least hints of how to

do it in a way so that you know

our dreams come true and fairy tales convert into reality.

So, I welcome you all to the fairyland of M&A's and I wish you all good luck.

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