Acquisitions, Internal vs. External Valuation, and Tourists, oh my.

Maximizing Shareholder Wealth – Week 3 Weekly Summary

My last post ended with a cliff hanger; was one of my team members abducted by aliens?  The answer to that question is a rather uneventful no.  She claimed the high-tech version of ‘the dog ate my homework’, saying her computer wasn’t working right.  Eventually she made some worth while contributions and the paper was submitted on time.

This week the homework was an individual paper, lighter than the usual problem solution papers.  This one was based on a simulation, which is just another way of presenting a scenario involving information being presented and the student interacting with the simulation by making choices on how to proceed.  Different choices yield different outcomes.  Since the simulation is presented as a small computer program, it can complicate the process of describing what was happening in the simulation while writing the paper.  The topics were agreeable for research so I was able to get some good references to incorporate into the paper.  My biggest concern with this assignment was that the professor was expecting me to take it a slightly different direction than I took.  The assignment description said something about “assess the risk of your choices”, but the rubric seemed slightly off from that.  So I used the rubric points as section headings and filled in that framework with research from the library and enough background on the simulation to give everything the right context.

The discussion question topics involved two areas; (1) what are the risks any company faces in a merger or acquisition and (2) how would you value an internal versus an external project differently.  A few common themes came out regarding the first topic (corporate culture, unexpected expenses, errors is estimating the value of the company being aquired).  The second one drew more variety, but no one seemed overly confident in their responses, so the dialog didn’t get very deep.

I also had company visiting this week, so that altered my study schedule a bit but worked out for the best.  I’m trying to keep the school work as something I do during my life without it taking over my life, so it was nice to see it actually work out that way. 

Team member abducted by aliens?

Maximizing Shareholder Wealth – Week 2 Weekly Summary

Looking at the concept outline each week can be intimidating.  This week the concept outline included evaluating internal and external growth strategies, working capital management strategies, cross-border growth strategies, assessing organizational performance through financial statements and a bit of a tangent on portfolio management.  Say what?  Translation: how to tell how much a company is worth and if they are using those assets wisely.  Now why couldn’t the professor just say that?  Check tuition rates and that might explain it; for the prices students are paying for masters level classes these days there has to be some big words thrown around.

The discussion questions in class brought the flowery language down to earth.  The first discussion question provided a nice transition from last week by asking students to discuss synergies that may exist between two companies through a merger.  Many students struggled with this and tried to talk around the topic.  I took a swing at discussing the advantages of a vertical merger, where a supplier and a distributor join forces.  That seemed to satisfy the professor.  The second discussion question on working capital management dug a little deeper into the reading assigned this week.  Since that discussion question didn’t really get much attention until later in the week most students were busy with the homework assignment so the discussion was a bit toned down.  Either that or people really didn’t get it and decided to keep quiet rather than prove they didn’t know by saying something out loud.

The homework this week involved a team benchmarking paper based on the scenario.  In some classes this type of benchmarking can be complicated by trying to find reliable sources for the topic at hand.  That was not the case this week.  A large number of real-world merger and acquisitions are well documented and accessible through the university library, making researching mergers and acquisitions more an exercise in filtering information.

The team paper composition was another story.  The team imbalance I mentioned in a previous post noted that my team only has three people.  One of them appears to have dropped out of the class.  Either that or she was abducted by aliens for the weekend.  Either way, she hasn’t contributed to the team paper so we’re left with the input of two people.  If she doesn’t show up by late this evening I’ll submit the paper and send a note to the professor explaining the situation.

Why does Wealth Maximization Sound Like a Bad Thing?

Maximizing Shareholder Wealth – Week 1 Summary
This week provided a smooth introduction to maximizing shareholder wealth.  With a focus on the metrics of wealth maximization, corporate valuation methods, and the impact of global elements on wealth maximization, the discussion naturally began with establishing a clear definition of wealth maximization.  This seemed to be a good topic to start the conversation and triggered a lot of activity in the forums, particularly around differentiating wealth maximization from maximizing profit.

The conversation then turned to corporate valuation.  This topic had a solid tie-in to the scenario introduced this week.  In the scenario, four companies are tangled in a complex mix of merger and acquisition options.  The discussion question topic established a focus of various corporate valuation methods and provided a good baseline for future study of the scenario.

The homework this week was a concept review worksheet.  The standard concept review worksheet asks for five principle concepts to be linked to the scenario and cited from the week’s text.  The concept review outline this week only included four main points, so the exercise challenged students to expound on an additional topic to complete the assignement.

The learning team formation was a self-selection process in this class.  That means one person picks Team A, everyone piles in until it is full (five people), someone starts team B, and the process repeats.  Ocassionally someone will get the idea that it would be helpful if everyone were in the same time zone (doubtful), so teams will align along time zones.  Regardless, the teams usually end up with the same number of people.  Not this time.  Team A has five people, and my team has three.  I’ve never worked with such a small group.  It’ll either be good, bad or indifferent.  Within six weeks I’ll know for sure.

One Special Monday Night

Managerial Decision Making – Week 6 – Weekly Summary 

The class wrapped up this week and I’m happy it is done.  It was a team paper week and I wasn’t pleased with the structure of the assignment or the topic.  Some team members had been laying back on previous assignments so I made a decision to contribute to a point but then just encourage them to step up.  I had enough points in the books that if my strategy failed and they didn’t pick up their share I’d still pass the class.  All but one person ended up contributing so that was a minor victory.  It’ll be another week before the grades are in, so I don’t know how much damage to my GPA the experiment did but I feel good about sticking to my principles.

An interesting thing in the final days of a class is to see comments from other students.  Most say nice things about the instructor, the class, and how much they’ve learned.  Some say they plan on taking a week or more off.  A few bail out of the program and announce they are not continuing.  One person this time said she had struggled mightily with the class and was taking a couple months off, but I didn’t see any notes saying someone was quitting outright.

Classes are scheduled on a Tuesday through the following Monday, so when a class ends it is a special Monday night.  Once every six weeks there is one night between classes when I don’t have homework assignments outstanding.  It isn’t exactly a celebration, more a chance to just exhale.  This time the Monday was a little tarnished in that the instructor for my next class emailed the syllabus- so technically I could’ve spent that time studying the requirements for the next class.  I glanced at it, but didn’t put any serious time into it. 

I relaxed on the deck, took a deep breath of fresh air on a summer evening and enjoyed the moment as the sun went down.  Tuesday morning classes start again.