COURSE NUMBER: MBA236E.1

COURSE TITLE: Mergers & Acquisitions: Lessons in Value Creation

UNITS OF CREDIT: 2 Units

INSTRUCTOR: Peter Goodson

E-MAIL ADDRESS: petergoodson@good-assoc.com

GSI: Steve Willis, steve_willis@mba.berkeley.edu

CLASS WEB PAGE LOCATION: http://bspace.berkeley.edu

MEETING DAY(S)/TIME: Wednesday, 8:00-11:00AM

NOTE: Course will meet 10 weeks out of the 15-week semester

PREREQUISITE(S):

• First year MBAs must have completed an internship prior to business school at a consulting, investment banking or private equity firm to qualify for admittance. Please contact Professor Goodson by email (petergoodson@good-assoc.com) for a discussion of qualifications before adding the class to your schedule. Since the discipline is as much about operating improvements to achieve value a capital markets background is not essential. Core finance and accounting are a must.

• In order to earn a passing grade, all students must attend the first two classes and submit the first assignment on time before the drop date. All cases must be turned in on time or failing grade for assignment is given. No exceptions.

• If you are thinking about adding the course, send an email to GSI Steve Willis steve_willis@mba.berkeley.edu prior to the first class session on in January in order to receive the syllabus and the mandatory assignments due in the first session.

• Do not add this course to your schedule if you have not contacted Steve prior to the first class, attended class throughout the add/drop period, and turned in the first assignment on time.

• Note - the class is usually oversubscribed so if you want to add the class on speculation you must attend the first sessions and complete the first assignment (drops usually occur given the toughness of the course).

CLASS FORMAT: Blend of cases and lectures and two or three visiting practitioners

REQUIRED READINGS: Text & Reader- heavy preparation for each class with demanding cold calls to insure accountability

BASIS FOR FINAL GRADE: Participation 25% of grade- rigorous cold calling in all sessions with weekly cases for discussion, three written team cases and one individual exercise. Note – small teams – three on a team maximum.

COURSE DESCRIPTION: Our purpose is to teach value creation in acquiring or selling a business. Most studies show that the majority of corporate acquisitions destroy the buyer’s value. Sellers enjoy an immense advantage with competitive auctions and the term “winners curse’ is usually very appropriate. Our mission is to offer experience-based curriculum in order to help students create shareholder value and avoid making costly pitfalls in future acquisition initiatives. Similarly we offer insight as to how to maximize value when selling businesses. The course deliverables are focused on…

1. Developing judgment … Sharing lessons in distinguishing practices that create value from those that result in loss... a sense of enhanced intuition and pattern recognition is often the result.

2. Exploring leadership … Directing an insightful acquisition process geared to mitigate risk in order to capture acceptable return on investment coupled with discipline in operationally improving the results of the acquired business after closing.

3. Polishing acquisition negotiation and related skills … Capturing the advantage in the tradeoffs inherent in doing a deal and in establishing a win-win scenario with the CEO and top managers of the acquired company after the transaction has been completed.

There are no “canned formulas” that make real world results easy to obtain. The “human factor” is dominant, the variables independent and logic is frequently trumped by blind ambition and/or self-interested advisors. This is not a corporate strategy course throwing out lofty business combination slogans, but rather a focused study of the leadership elements necessary to create shareholder value in clearly measureable terms.

This is a domain where learned experience proves to be much more valuable than textbook niceties. Therefore, sharing the hard earned lessons gained by the Professor in participating in thousands of mergers and acquisition successes, as well as failures, over the last forty years is a course cornerstone. Because acquisitions frequently destroy value, the most important insight is to guide you to develop your own intuition to be able to detect nonsense and stick to using proven methods of success.

It is important to recognize upfront that many believe this is a 3-unit plus credit class disguised as a 2- unit class, in terms of the work load. It is indeed a heavy investment in outside work relative to other classes. There is no doubt that you will be challenged if you enroll.

The following 12 course topics will be covered:

1. Trends, Motivations and Advisors’ Roles

2. Price and Value … Forecasting, Operating Improvements and Evaluating

3. Structuring … Tax, Accounting and Legal

4. Smart Negotiation … Managing the Deal Process

5. Hostile Takeovers … Takeovers Utilizing Un-negotiated Tactics

6. Private Equity … Creating Value with The Use of Other People’s Money

7. Acquisition Financing … The Lenders and the Process

8. Technology… Distinctions in Acquiring in the High Technology Space

9. Emerging Markets … Global Stumbling Blocks

10. Due Diligence … Rigorous Investigation of What Matters

11. Acquisition Integration … Consolidation Disciplines to Create Value

12. Managing After Closing … Operating Improvements Drive Value

BIOGRAPHICAL SKETCH: Professor Goodson is a pioneer in the private equity discipline as an early stage partner at Clayton, Dubilier & Rice. One of the first management buyout firms, they have purchased and transformed performance at large companies for over 35 years. CD&R has acquired 52 businesses valued over $80 billion where the firm enhanced value operationally. Prominent examples would include Lexmark – the IBM Information Products business, the Uniroyal-Goodrich Tire Company, Hertz Rental Car and Home Depot. One of the operating partners in the firm is Jack Welch, the former CEO of GE.

Before joining Clayton & Dubilier, Professor Goodson was a Manager Director at Kidder, Peabody & Co., where, at the age of 26, he founded the M&A Group in 1972, and was one of the first to specialize in acquisition advisory services in the industry. He personally participated in over 800 corporate assignments and was an early innovator in developing state of the art M&A advisory practices at investment banking firms. Being one of the foremost experts in seller advantaged exits, Mr. Goodson was chosen by his partners to negotiate the $600 million sale of Kidder to General Electric, setting a record for the highest relative price paid for an investment bank on record.

Retiring and relocating to California, Professor Goodson has taught at Haas for the last 8 years. He has also taught or lectured at Harvard, Kellogg, Tuck, NYU Stern and Columbia. He was awarded the Cheit Outstanding Teaching award by students several times. He also teaches Emerging Market Private Equity: Risks, Rewards and Knowing the Difference and in the summer block week format the Turnarounds: Effective Leadership in Crisis course.

An “adventurer with his own capital and endless curiosity”, he is presently assisting a number of emerging market private equity firms to develop value added measures to improve investment returns. Professor Goodson recently created the Value Optimization Board for Mekong Capital in Vietnam, was just appointed to the Tata Capital Growth PE Advisory Board in India and is advising a number of developing enterprises in many of the emerging frontier economies, such as Mongolia. He is a fellow at the Tuck Center for Entrepreneurialism and Private Equity and is a frequent speaker on the evolution of private equity practices and the global future of “private equity as a source of innovative and entrepreneurially friendly capital”.