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Indian Institute of Management, Shillong

POST GRADUATE PROGRAM IN MANAGEMENT (2017 – 19)


Course Outline

Course Code EFA118401 Term IV


Title of the Course: Investment Banking and Business Credit: 1.00
Valuation
Name of the Faculty: Dr. Naliniprava Tripathy
Email ID: nt@iimshillong.ac.in/nalini_prava@ya Contact No.: 0364 2308037
hoo.co.in
Prerequisite Deep interest for learning Location Ground Floor

COURSE DESCRIPTION:

The Investment Banking & Business Valuation is considered to be the nucleus of the growth model
designed for the economic development of a country. This Industry has developed tremendously
since the beginning of economic planning. Investment Banking interface with major users of the
International Capital Markets: Banks and Financial Institutions, Institutional Investor Segments:
Fund Managers, Hedge Funds, Mutual Funds, Pension Funds, etc., Venture Capital / Private
Equity, Mergers & Acquisition. The careers in Investment Banking and Business Valuation
became challenging now a day. Currently each organization is required to make investment
decisions that can add value to the organization. A finance professional nowadays need to be
abreast of various methods, approaches, tools and techniques in decision making process to derive
the maximum value for the organization

COURSE OBJECTIVE:

Keeping in view, the course has been designed to provide an insight into the operational policies
and valuation practices of the Investment banking organization to meet the growing needs of the
economy, which is need of the day. It also deals with the complete idea about Investment Banking
Valuation in manifold dimensions with latest development in the exciting world of finance. It is
helpful to those contemplating careers in investment banking, security analysis, funds
management, and financial consultant in the industry.

LEARNING PEDAGOGY:
The instructor’s approach to this course will be of learning facilitator. Significant amount of
learning will occur out of the class through pre reads, assignment, projects (Term Paper), cases &
article analysis. This approach helps the students to focus on the application of concepts within a
business context. It promotes independent thinking; clear communication and a careful attention
to all the dimension of a problem. If any participant found unprepared or less prepared for the
class, he or she will not be allowed to attend the session. In such actions the participant will be
marked absent for that session. All the participants are expected to bring their textbooks, case lap
tops (if you have), and writing pen for all the sessions. In order to carry out quickly the complex
calculations very often done in modern finance, each student will need to have a financial
calculator.

CLASS PARTICIPATION:

This course requires the full participation of all the students. The facilitators will keep track of
class participation in order to determine the portion of your grade. The participation in real terms
refers to preparation to the class, concentration in learning the self-learning topics, and getting the
solution to the exercises. Students are expected to have done pre-class readings and be actively
involved in class discussions. This class thrives on your active participation – your questions and
comments can further everyone’s learning and are an essential part of the classroom experience.
If, however very few people participate voluntarily, I may randomly call on students. In addition,
you and your group may volunteer to present a case in class.

TEXT BOOK ANDREADING MATERIAL:

Investments valuations by Aswath Damodaran, Wiley India Pvt ltd, 2012


The Investment Banking: Text and Cases by Naliniprava Tripathy, Publisher: Himalaya
Publishing House, Mumbai 2014.

In addition to the textbook and required readings, students are encouraged to read popular financial
press articles during the term for better understanding of market happenings. The Economist,
Financial Trader, Investment Dealers’ Digest, Financial Times, international business newspaper,
Wall Street Journal, Business Week etc. The students are expected to use the IIM-S library
extensively for thorough learning. IIM-S library has many specialized books on various sub topics
of financial market; any student who is interested in advanced learning can refer those books.

SURPRISE QUIZZES:
Throughout the course, Surprise quizzes will be conducted in class lasting approximately
fifteen/twenty minutes. The average marks of all the quizzes will be considered for grading.
All the quizzes are closed book and it covers pre reads, self-learning topics, market, and case
analysis. The end term exam pattern will be of integrated exercises or case analysis. Make-up
quizzes and exams will not be given.

HOMEWORK ASSIGNMENTS & CASE ANALYSIS:

Students are to form groups based on instructions given by the instructor. You should organize
into groups of four people. Each group will write a detailed report on each of cases. A case brief
written (as WD /PPT) up by each participant has to be prepared. A concise, well organized,
insightful analysis is expected. Case briefs should not be less than six pages. It must be typed and
single spaced; font 10, times new roman. Exhibits, figures, and numerical calculations should be
attached on separate pages. A suggested organization of a case brief: (1) details of background
knowledge required for solving the case, case back ground, various levels of problem identified in
the case, details of your analysis and your interpretations, specific recommendations and
implementation, final conclusion. There are often no “right answers” to cases, just good arguments
and bad arguments for taking particular actions or decisions. There is sometimes a limited amount
of quantitative information on which to make a decision and thus it is often impossible to compute
a precise numerical answer, as might be done in other finance courses. The report should be a
complete review of the situation and address all points believed to be important for the analysis.
You can use necessary assumptions in solving the case. The assumptions have to be strongly
supported by logical explanations. Cases develop our decision-making ability by forcing us to
confront the complexities of real-world situations.

SUBMISSION POLICY:

ALL group case reports should be submitted to instructor by the due date. Late submission will
be penalized.

PROJECT:
This project provides an opportunity to get some hands-on experience applying the theory into
practice. In the process, participants will get a chance to (a) evaluate the applicability of the
textbook theories in real time situations and (b) to analyze the performance of entities and markets
using statistical and analytical methods. The project should be more focused to the topic. The
members of the group can share the tasks among themselves, but a member of the group cannot
be ignorant of the work done by other members. Any student showing less than the minimum
required interest in the project would be advised to withdraw from the course. The members of the
group have the right to charge a complaint (to the Facilitators) against any of their group members
for not cooperating for the success of the project. On such happenings the Facilitators have the
right to enquire on the issue and take action at the interest of other members. The project will be
done through various phases; (1) conceptual framework, (2) review of past studies (3) research
framework (4) empirical analysis (5) findings and conclusion.

EVALUATION COMPONENTS:
Surprise Quizzes: 20%
Case Analysis, Presentation& Participation: 20%
End Term Examination: 40%
Project and Presentation: 20%
Note: All evaluation components are individual evaluation components.

LEARNING SCHEDULE:
Sessions 1
Topic: Introduction of Investment Banking & Introduction to Valuation, (Tripathy, Investment
Banking: Text and cases, Text- Ch-6) (Damodaran, Investments valuations, Text- Ch-1& 2)

Sessions 2-3-4
Topic: Introduction to Business Valuation, Elements of Business Valuation, Valuation Approach,
DCF Valuation, Relative Valuation (Tripathy, Investment Banking: Text and cases) (Damodaran,
Investments valuations, Text- Ch-13,14,18 & 19).
HBR Case: Bluntly Media: A Private Company Valuation
Sessions 5-6-7
Topic: Essentials of the Equity/Stock Market: Initial Public Offerings valuation ((Tripathy,
Investment Banking: Text and cases)
HBR Note: A Note on the Initial Public Offerings
HBR Case: Facebook Inc. Initial Public Offering

Sessions 8
Topic: Valuing Financial Service firms, (Damodaran, Investments valuations, Text- Ch-21)
HBR Case: Comerica Incorporated: The Valuation Dilemma
Sessions 9-10-11
Topic: Valuing Start-up firms/Venture capital valuation (Damodaran, Investments valuations,
Text- Ch-23) (Tripathy, Investment Banking: Text and cases Text-Ch-8)
HBR Note: A Note on Angel financing
HBR Case: Out Reach Networks: First Venture Round

Sessions 12-13
Topic: Valuating Private equity (Damodaran, Investments valuations, Text- Ch-24) (Tripathy,
Investment Banking: Text and cases, Text- Ch-7)
HBR Case: Spyder Active sports

Sessions 14-15
Topic: Leveraged Buy Outs (LBOs) valuation ((Tripathy, Investment Banking: Text and cases)
HBR Note: A note on Leverage Buyout
HBR Case: Announced latter on

Sessions 16
Topic: Structured Finance: Loan Syndication, Securitizations, CDO, CBO, and Hedge Fund
(Tripathy, Investment Banking: Text and cases)

Sessions 17-18
Topic: Value Enhancement: Economic Value added (Damodaran, Investments valuations, Text-
Ch-32)
HBR Case: Announced Later on
Sessions 19-20
Topic: Presentation of Project