COURSE NUMBER: MBA 236E.2

 

This course is cross-listed with EWMBA

 

COURSE TITLE: Mergers & Acquisitions: A Focus on Value Creation

 

UNITS OF CREDIT: 2 Units

 

INSTRUCTOR: Peter Goodson

 

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

 

GSI: Serge Stanek (serge_stanek@mba.berkeley.edu)

 

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

 

MEETING DAY(S)/TIME: Tuesdays, 6:00-9:30PM

 

NOTE: Course will meet 10 weeks out of the 15-week semester, thus is worth 2 units of credit

 

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.

 

  • In order to earn a passing grade, all students must attend the first two classes and submit the first assignment (due on February 2nd) on time.  All cases are 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 Serge Stanek (serge_stanek@mba.berkeley.edu) prior to the first class session on Tuesday, January 17th 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 Serge 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 with visiting practitioners

 

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

 

BASIS FOR FINAL GRADE:  rigorous cold calling in all sessions, 3 written team cases and 1 individual exercise- Note small teams - 3 on a team maximum

 

COURSE DESCRIPTION: The course 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 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.

4.      Fostering Acquisition Intuition … Improving the students’ facility to rapidly recognize patterns of decision trees that are a threat to common sense

 

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.           International Deals … 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:

Mr. Goodson was one of six early stage partners at the firm of Clayton & Dubilier, a private equity firm that purchased and managed large industrial companies. The strategy of the firm is to buy under-performing businesses and, through shifts in business strategy and transformation of the beliefs and practices of people, turn losers into winners. Among the $8 billion worth of businesses successfully acquired and values enhanced are prominent examples such as Lexmark – the IBM Information Products business, the Uniroyal Goodrich Tire Company, and the O.M. Scott & Sons lawn care products company. The firm’s investment record produced a compound annual return in excess of 50 percent over the 13-year history prior to Mr. Goodson’s departure.  Mr. Goodson also serves as an advisory partner in Dubilier & Company, a private equity firm, applying the strategy of Dubilier & Co. to smaller enterprises, and is a lead member of the Mekong Capital Advisory Board, a leading Vietnamese private equity firm. Now devoting his primary efforts to philanthropic and educational causes, Mr. Goodson has been elected a Fellow of the Tuck Business Schools Foster Center of Private Equity & Entrepreneurship and was awarded the Earl E. Cheit Outstanding Teaching Award by the students of the Haas Business School in 2008, 2009 and 2010.

 

Prior to joining Clayton & Dubilier, he was a Managing Director at Kidder, Peabody where he founded the Mergers and Acquisitions Group over 40 years ago. He has personally participated in approximately 1,000 corporate assignments. Under his direction, the Mergers and Acquisitions Group enjoyed 12 years of rapid growth and increased market share. Among Mr. Goodson’s more interesting merger and acquisition assignments were the $6.2 billion acquisition by Kohlberg, Kravis & Roberts of Beatrice Companies, and the $1.2 billion acquisition of Richardson-Vicks Inc. by the Proctor & Gamble Company, and the successful restructuring of GenCorp in response to a hostile offer. Mr. Goodson served as co-head of the firm’s Investment Banking Department, engineering a successful reorganization, then spearheaded its successful entrance into Merchant Banking. He was elected to the Managing Committee to oversee the firm’s worldwide business. Mr. Goodson was chosen by his partners to negotiate the $600 million sale of Kidder to GE which most believe is still the highest relative price ever paid for an investment banking firm.