FI 709: Case Studies in Corporate Finance

 Instructor: John D. Sullivan, Ph.D., Assistant Professor, Boston University, 808 Commonwealth Ave, Boston,  Massachusetts. Office Phone (617) 353 - 3018 Email: jsulliva@bu.edu

 Campus & Time: Quincy 6:00 PM to 9:00 PM - Wednesday

 
 Office Hours: By appointment. You may call me either at home or at the office. If I'm not home or in a meeting,  please leave a message on my answering machine or voice mail and I will get back to you as soon as possible.

 Schedule Issues: From time to time, I am called away on business and this may interfere with class. I will let you  know as soon as possible if I will not be able to conduct class. In the event that we cannot hold class for one  reason or another, we may need to reschedule or move an assigned case to the next week.

 Course Content and Objectives

 This course will look at the principle issues facing a financial professional in today's competitive environment.  Principle subjects will be: Financial Forecasting, Cost of Capital, Rate of Return, How to Manage Growth,  Discounted Cash Flow, Valuation, Mergers & Acquisitions, and Bankruptcy.

 Case Study Analysis

 The case studies for this class were chosen to represent different aspects of financial strategy. Case study enables  us to venture into many business situations, analyze the important issues, and after detailed review, make  recommendations.

 A Note on Academic Standards

 Both myself and Boston University consider plagiarism a serious academic offense. Any form of plagiarism, that is,  taking the ideas or words of another and presenting it as your own work, will be passed along to the Metropolitan  College Academic Conduct Review Board. Plagiarism includes duplicating work from other classes such as  handing in the same case study.

 Textbooks and Other Required Reading:
 Textbook (Optional): Financial Management, Brigham and Houston. Dryden Press

 Harvard Cases & Notes www.hbsp.harvard.edu
 Anheuser Busch 9-293-082
 Braniff International 9-385-001
 Continental Airlines 9-294-058
 Goodyear Tire 9-290-016
 Humana Inc. 9-294-062
 RJR Nabisco 9-289-056
 Walt Disney Productions 9-288-045
 Vanguard Group 9-293-064
 Jaguar plc. 9-291-034
 "Is Your Stock Worth its Market Price?" 81309
 "Choosing Compatible Acquisitions." 81109
 Hospital Corp of America A 9-283-053
 Scudder Funds 9-294-026

 Cases Available through the Instructor or the ECCH - www.ecch.cranfield.ac.uk
 Genesis Health Ventures 200-024-1
 Laidlaw 201-006-1
 Total Renal Care 201-007-1
 Stone & Webster 201-008-1
 Loews 201-035-1
 WR Grace 201-041-1
 Enron 102-014-1
 MP3.com 201-030-1
 Pets.com 201-009-1

 Other Suggested Reading:
 The Wall Street Journal
 Investor's Business Daily
 Fortune Magazine
 Business Week

 Suggested Calculator
 Hewlett Packard HP 12-C

 Grading:
 FI 509
 First Case Write Up 25%
 Second Case Write Up 25%
 Group Case Write Up & Presentation 30%
 Class Participation 20%

 FI 709
 First Case Write Up 15%
 Second Case Write Up 15%
 Third Case Write Up 20%
 Group Case Write Up & Presentation 30%
 Class Participation 20%

 Case Analysis and Preparation

 For students taking FI 509, you will need to prepare 2 case studies of your choosing (1 of these cases must be  from the ECCH case packet). Graduate students (FI 709) must prepare 3 cases (1 of these cases must be from  the ECCH case packet). Each case study will be due at the beginning of the class in which that case study is being  discussed. For a successful case write up, you will need the following:

 1. Case papers should address the key issues which pertain to the financial strategy and then make clear  recommendations with as much support as possible.

 2. Papers should be no more than three double spaced pages (not including exhibits) and include a cover page with  your name, the date, the course number, and the title of the assignment (case name).

 3. Papers should be organized into specific sections. For example, Background, Key Issues, Risk,  Recommendations, and Detailed Support for Any Recommendations.

 4. Late Papers will not be accepted.

 5. Your grade will depend upon how well you identify the key issues in the case and make a solid recommendation.

 6. All Footnotes and References must use the APA format.

 Group Paper & Presentation

 The class will divide into groups of two to four persons. 50% of your grade will be based on the paper and the  remaining 50% will be based on the presentation. Grades will be assessed as a group and not as an individual  effort.

 Your written assignment is as follows:

 1. Locate a publicly traded company which is presently experiencing financial difficulty. This could be a firm which  is already in Chapter 11, experienced a major layoff, reported an unexpected quarterly loss, extended or  consolidated or defaulted on debt, or has announced a restructuring plan.

 2. Write a ten page double spaced paper (not including exhibits) on why the company is in the position it is and  what recommendations you have to save the firm. I also want a copy of your paper on disk. Your analysis should  include the "real" reasons why the company is distressed and not symptoms. As financial consultants, it will be your  job to locate the true problem and provide financial solutions to bring the company back into solvency. Major  topics should include: A brief background of the industry which the company operates, a background on the  company and the management team, how the company got into trouble, and what financial recommendations you  have to pull them out.

 3. You have an enormous amount of material to use for this project. Annual Reports and 10Ks can be obtained by  contacting the company's Investor Services Department.

 4. Prepare your presentation as though it was before the Board of Directors of the company. The class will be  asking specific questions about your analysis, so be prepared.

 5. Group participation by each member is critical to the success of the group. Therefore, each group member will  evaluate each of the other members. I will provide each member with an evaluation form.

 Class Participation

 Meaningful class participation is an important element in case study analysis. Therefore, it is imperative that students  contribute to each class discussion. Please be prepared each week. Your class participation grade will consist of  two elements: Attendance and Quality Participation.

 Schedule

 1. January 15
 Introduction & Review

 2. January 22
 Prepare Case: Anheuser Busch
 Capital Budgeting & The Cost of Capital
 Prepare Case: Goodyear Tire

 3. January 29
 Prepare Case: WR Grace 201-041-1
 Prepare Case: Humana Inc
 Assignment Due: A list of the members of your group

 4. February 5
 Discounted Cash Flow & Introduction to Mergers & Acquisitions
 Prepare Case: MP3.com 201-030-1
 Prepare Case: Pets.com 201-009-1
 Assignment Due: Group one page summary of the company to be analyzed.

 5. February 19
 Leveraged Buyouts
 Prepare Case: RJR
 Read Case (You cannot write this case): Enron 102-014-1
 Barbarians at the Gate

 6. February 26
 Read: Choosing Compatible Acquisitions
 Prepare Case: Jaguar plc
 Prepare Case: Stone & Webster

 7. March 5
 Bankruptcy & Turnaround Strategy
 Prepare Case: Braniff Airlines
 Prepare Case: Continental Airlines
 Prepare Case: Laidlaw

 8. March 19
 Health Care Finance
 Prepare Case: Hospital Corp of America A
 Prepare Case: Genesis Health Ventures

 9. March 26
 Managing Your Stock Price
 Read: Is Your Stock Worth its Price?
 Prepare Case: Walt Disney Productions
 Prepare Case: Total Renal Care

 10. April 2
 Financial Services
 Note on "The Mutual Fund Industry"
 Prepare Case: Vanguard
 Prepare Case: Scudder Funds

 11. April 9
 Group Presentations
 Assignment Due: Group Papers

 12. April 16
 Group Presentations

 13. April 30
 Group Presentations