IIMA Course Catalogue

Programme

PGP

Term

Academic Year

2021-22

Course title

Mergers, Acquisitions & Corporate Restructuring

Area

Finance and Accounting

Credits

1.25

Instructor(s)

Prof. Sobhesh Kr Agarwalla

Course Description & Objectives

Introduction:
It is widely recognised that any growth-seeking company would have to embrace the M&A (mergers and acquisitions) route to corporate development at some stage in its corporate life cycle. This is indeed so despite the none-too-inspiring track record of success in M&A. Most empirical studies indicate that only about a quarter to a third of the M&A transactions could be termed successful in creating value, the avowed goal of every deal. Yet the global M&A transactions remain a multi-trillion dollar business, though with sharp year-on-year variations mirroring the broader economic and technological trends. Companies like CISCO have successfully grown over the years by making acquisitions on a regular basis.

Besides seeking growth through M&A, companies across the world also pursue the opposite—contraction through divestiture and de-merger (spin-off) as they constantly endeavour to realign and rebalance their business portfolios and refocus their energies and resources. A severe downturn, like the one the global economy has been going through for some time now, imposes only additional pressure on companies to restructure—to achieve lighter balance sheets, simpler organisation and leaner business portfolios. Indian environment, relatively placid historically, is no more impervious to this restructuring trend as Indian companies also rework their growth strategies to achieve superior market position and greater global presence. Given the sheer sweep of the restructuring phenomenon, most of us also tend to be impacted by these forces, be it as investors or investment bankers, or as employees of the companies involved, or as members of the society at
large. It is equally important to understand the key macro-economic and firm-level forces driving the restructuring initiatives at individual companies that could eventually lead to massive structural transformation of industries and even economies at large.

It is in this setting that the course on Mergers, Acquisitions and Corporate Restructuring (MACR) is being offered as an elective. The course, as indicated earlier, would seek to capture the multi-dimensional -- strategic, financial, organisational, human and legal -- facets of this complex phenomenon.

While it is acknowledged that the restructuring phenomenon could be studied from a variety of perspectives such as those of the industrial and financial economists or of the behavioural scientist, the focus of this course is firm-oriented and the view point predominantly managerial. Creation and sustenance of shareholder value is the central theme that runs through the course. Consistent with this theme, the course seeks to offer usefulinsights into and help develop broad perspectives on such issues of contemporary relevance as linkage between corporate strategy, financial policy and shareholder value, company/business valuation and corporate governance dimensions of restructuring transactions.

Objectives:

a) Familiarity with different types of restructuring transactions-both business combination and break-up transactions (such as merger, acquisition, LBO, de-merger, divestiture etc.) and their rationale.
b) Enhanced understanding of corporate growth and renewal strategies - expansion, diversification and shrinkage - through mergers acquisitions and divestments. (Motives)
c) Sharper insights into the process of value creation by firms and businesses, and to the sources of the value.
d) Stronger analytical foundations for evaluating the impact of corporate strategic decisions on shareholder value.
e) Better appreciation of the importance of organisational process issues such as pre-transaction planning, deal execution and post-merger integration.
f) Broad awareness of the applicable legal, tax and capital market issues and their implications for deal structuring.
g) Some exposure to the working of the market for corporate control and corporate governance dimensions of corporate restructuring.

Pedagogy

- Pedagogy would include analysis of, and in-depth discussions involving a number of cases, faculty-presentations and discussions and student assignments.

- The cases/faculty presentations will examine strategic restructuring and repositioning strategies both in the Indian as well as international contexts exposing the participants to transactions in a variety of industries, economic, regulatory environments and strategic contexts.

- Detailed session-wise outline is given later in this outline.

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