Curricula

Objective

The simulation project aims to enrich following competences among participants:
-Analyzing and presenting complex information in order to do effective sense-making. The journey from abstract thinking to concrete procedure is the core expected outcome of the project.
-Consultancy based on the in-depth analysis and empirical findings.
-Negotiations through learning by doing.
-Co-operation among competing teams.

The project is run on the principles of following Intended Learning Outcomes (ILOs):
1. Skills in Critical and Analytical Understanding (IBCRI)- Critically review, analyze, and understand information available from academic and professional business sources.
You will be problematizing the nature and dynamics of financial risks from multiple perspectives that the case company is experiencing. To achieve this ILO, you will be studying multiple theoretical underpinnings, and professional reports and at the same time analyzing stock market data, and accounting information.
2. Applied Business Skills (IBBUS)- Apply disciplinary and interdisciplinary knowledge to analyze business challenges and global trends to propose or put into action practical business solutions based on the findings.
You will be applying your knowledge and skills learned various finance courses.
3. Communication Skills (IBCOM)- Communicate responsibly and effectively in English through oral, written, and digital formats in academic and professional contexts.
You will understand the language that business organizations speak through the numbers! Furthermore, presentations, written reports, corporate annual reports, stock market data, exchange of notes related to the case company will enrich your English language skills in oral, written, and digital formats.
4. Intercultural Collaboration Skills (IBCOL)- Demonstrate intercultural teamwork, leadership, and conflict resolution skills.
You will be working in teams with multicultural, multinational, and multilingual backgrounds, and your skills to work, cooperate, collaborate, and resolve conflicts will improve.
5. Skills for Personal Career Development (IBPER)- Reflect upon and deepen personal and professional learning in order to recognize their strengths to support their career development.
You will acquire several personal and professional skills, which you can apply in solving various business problems in your future career.

Content

Activity Week 1
1. Cross cultural management workshop
2. Introduction of the course and of assignment #1
Assignment #1- Industry analysis
Please examine the current state of the industries where your companies are most active and analyze the industries within which your companies compete.

Your analysis might include a definition of the industry, an analysis of the industry lifecycle, the history of the industry, a ratio analysis of the industry’s financial performance, a review of how differing trends affect the industry (change drivers), notable recent events, external influences on the industry, a review of competition (largest players, market shares, clustering etc.) for the industry, or market outlook (trend, development, growth potential etc). You can use methods like Porter’s five forces analysis, PESTEL analysis etc.

Deliverables:
You should aim for a total length of about 10-12 slides for this assignment on Industry analysis.
Intercultural Awareness in Collaborative virtual project: Week 1a + b & Week 2a + b

Reference
Fundamentals of Corporate Finance, J. Berk, P. DeMarzo, J. Harford:
Chapter 22: Mergers and Acquisitions


Activity 2 Starts:

1. Feedback sessions per group with lecturer on assignment #1
2. Introduction of assignment #2
Assignment #2- Company and competitive analysis
You should now add to Assignment #1 by analysing your own company and that of your counter party. Make extensive use of the annual reports of both companies. Other sources available on the internet include investor presentations (on investor relations sites), brokers’ reports (via libraries and sites like Financieel Dagblad, Morningstar.com, Financial Times, Bloomberg), etc.
The analysis should lead to an internal decision (not documented in the analysis) whether your company should acquire the competitor or if your company should be taken over by the other in order to safeguard the long-term continuity of your company in today’s competitive international markets.
You might consider, amongst other aspects, the following:
1. Companies’ structures (shareholders, operating companies, regions covered, market shares per region)
2. Companies’ goals and future plans (organic growth and divestments/acquisitions)
3. Companies’ financials (mainly profitability, leverage and investors ratios like EPS, P/E, PEG and pay out, dividend yield, total returns)
4. The industry structure and future (growth) potential in an international perspective, also including generic competition
5. Competitors: peer analysis based on same issues mentioned above.
6. DO NOT WORRY ABOUT VALUATION OF THE COMPANIES (YET).
You might want to make use of a SWOT analysis, Porter’s generic competitive strategies, The Business Model Canvas and financial statement analysis over the last 3-5 years.
Identify the differences and similarities between the two companies and the impact of that on your negotiations.


Deliverables:
Combine your company analyses with assignment #1 so that you now have a single presentation that gives an overview of the industry and company views. The assignment should be in presentation format (Prezi/PowerPoint). Max 30 slides. Financial statements and ratio calculations (Excel).
Prove (screen print) of Skype session with counter party team.

Reference
Fundamentals of Corporate Finance, J. Berk, P. DeMarzo, J. Harford:
Chapter 2: Introduction to Financial Statement Analysis


Activity 3 Starts:

Introduction of assignment #3 / Feedback sessions per group on assignment #2
Assignment #3- Negotiations and business valuation
Each team can now begin exploratory negotiations on the merger with the team with whom they have been matched.
You will need to organize a series of meetings in which you attempt to come to an agreement on the terms of the merger. The first meeting might include your team’s overview of your company and industry. There is every reason to assume that you will be able to negotiate a mutually beneficial outcome for both companies, and you should approach your negotiating partners accordingly. After the presentations on both sides, followed by an extensive Q&A session, the management team might need internal discussion time to digest any proposals and current situation. That is, it is likely that you will need to organize more than one meeting in order to give your team time to consider the points raised and respond appropriately. It is also likely that you will need to clarify some points of your discussions via email.
What would be the synergies if the companies were to merge?
What should be the new strategy of the merged company?
Also during this week start working on the preparation for the valuation of the companies that needs to be discussed next week.
Prepare the business valuation for your company and the counter party company on a stand-alone basis using:
1. Income approach (Discounted Cash Flows including integrated planning and cost of capital estimation)
2. Market approach (Multiples)
3. Asset approach (Net asset value)
4. Comparison of calculated firm value to market value
5. Quantification of possible synergies between the two companies

Deliverables:
You should submit:
1. your meeting minutes and emails
2. a summary of the points on which you have come to a tentative agreement
3. any analysis you did in order to support your negotiations.
4. Excel sheet with all the calculations and written report (Word) with explanations (5-10 pages)

Reference:
Fundamentals of Corporate Finance, J. Berk, P. DeMarzo, J. Harford:
Chapter 4: Time Value of Money: Valuing Cash Flow Streams
Chapter 10: Stock Valuation
Chapter 13: The Cost of Capital

Week 4:
Activity 4
Introduction of assignment #4 / Feedback sessions per group on assignment #3
Assignment #4- Valuation, financing and Letter of Intent
Your goal is to, through a series of proposals and counter-proposals, determine such things as who will be acquiring whom, at what price, how the transaction will be paid for, where the funds will come from, etc. All of these, and any other agreements could be captured in a (very brief and high-level) letter of intent between the two companies.
Refine the business valuation from assignment #3 for each of the companies to substantiate the negotiations on price. Use at least the discounted cash-flow method and one other method to estimate the enterprise and equity value of the companies.
Valuation is important in order to show that the price to be paid is in line with the expected value, including strategic considerations and synergy effects.
As the financing is important for the shareholders of the target (to secure the payment) you will have to explain the ways that the deal can be financed.
Furthermore provide main audit areas of due diligence.


Deliverables:
Business valuation refinements (Excel).
Letter of Intent. Minutes of meetings. Financing Plan. In total 5-10 pages (Word).

Activity 5
1. Introduction of assignment #5 / Feedback sessions per group on assignment #4

Assignment #5- Stakeholder analysis
As many parties are involved in a merger or acquisition, we need to address the concerns of more than just the shareholders. Perform an analysis of the consequences for several groups of stakeholders and suggest potential solutions for their opposition to deal. For example, if you feel the takeover will influence the future of your employees, you might think about ways to cope with them and with labor unions and others. Include the Corporate Social Responsibility issues in you analysis.
Prepare a presentation to show potential problems and risks after the acquisition and how to deal with these. You have to focus on the consequences for your company (either being the buyer or the seller) but also the impact on the stakeholders of the other company has to be part of your analysis.
Also make an outline of the process of the merger/acquisition in time from this phase forward and prepare an pre- and post-merger/acquisition integration plan. Please take into account the intercultural opportunities, difficulties and challenges.

Deliverables:
Presentation (max. 20 slides)

Activity 6
1. Introduction of assignment #6 / Feedback sessions per group on assignment #5


Activity 7

Activity 8
(joint session including all teams and faculty. All presentations will be held during the session including discussion, feedback, closing of the project)
Assignment #6- Final presentation
The final task for your group is to bring all of the work that you have done into a single investor relations presentation in order to convince shareholders to approve the deal. With a brief overview of the business environment, analysis of the two companies, business logic for the acquisition, justification for the premium paid/received above market cap, stakeholder analysis, summary of the proposed deal, overview of the whole M&A process and integration plans. Also prepare a public letter of communication (press release) on the proposed deal.

Deliverables:
Presentation (max. 30 slides) & Written deal communication letter (1 page)

Qualifications

Minimum requirement is the study of Management Accounting course at JAMK in the semester 2.

Assessment criteria, satisfactory (1)

Participation in the activities, attending required meetings, calculations

Assessment criteria, good (3)

Participation in the activities, attending required meetings, calculations. Inferences needs to be drawn based on research and analysis.

Assessment criteria, excellent (5)

Participation in the activities, attending required meetings, calculations. Inferences needs to be drawn based on research and analysis. Interpretations to be made.

Assessment criteria, approved/failed

Final presentation, active interactions with students at JAMK and counterparts at Utrecht University of Applied Sciences, submission of assignments in time, quality of assignments.

Materials

Lectures slides of Management Accounting, and Financial Management course.
Fundamentals of Corporate Finance, J. Berk, P. DeMarzo, J. Harford.
Brealey, Richard A., Myers, Stewart C. and Allen, Franklin: Principles of Corporate Finance. McGraw-Hill.
Barry Elliott, Jamie Elliott: Financial Accounting and Reporting, Pearson Education.

Further information

The focus of the project is on internationalization through mergers and acquisitions (M&A). Students will be grouped in 5 teams. JAMK students will be negotiating (competing) with (against) 5 teams of Utrecht University of Applied Sciences. During our first meeting, students will attend ‘introduction and a cross cultural workshop’ via (MS Teams) in which five teams of each university will meet their counterparts and start planning their communication channels and other practicalities.

Two companies (Finn Air and KLM) will be units of analysis for each team. Needless to say this is a simulation exercise. Students shall be using financial management, accounting and business strategy related concepts and skills to analyze their case companies. The analysis includes the followings:
1. whether merger between Finn Air and KLM is possible. This possibility will be rationalized by applying preliminary financial analysis,
2. negotiations between “counterparties” and creation of roadmap (e.g., stages, steps, schedule and structure) to implement the proposed merger process,
3. valuation of combined entity (Finn Air + KLM),
4. analysis of financial and non-financial risks that can impede the merger between Finnish and French companies,
5. forming risk management strategy to successfully complete merger
6. effects of merger on various stakeholders.
7. end results of consolidated entity.
-In order to do above in-depth analysis of case companies is very important. Principal study material for this project will be annual reports of companies, financial statements, corporate governance reports, stock market data, analysts reports, financial management and management accounting study material including text books, research articles and professional bodies reports and websites.

JAMK students, who have (are) studied (studying) Financial Management, Global Financial Management, Finance & Corporate Governance Track and Management Accounting already have significant exposure to above type of literature and tasks.