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Robert F. Bruner's
Scholarly Papers
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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24 Nov 02
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15 Jun 06
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4,437 (315)
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Abstract:
This book presents 46 case studies in finance, targeted toward upper-level undergraduates and introductory and intermediate-level MBA students. The purpose of these cases is to afford the basis for classroom discussion of tools and concepts. The range of topics includes value creation, market efficiency, economic profit, financial analysis and forecasting, cost of capital, capital budgeting, dividend policy, equity issuance, capital structure management, derivative securities, and mergers and acquisitions. The spirit of these cases is to link the study of value creation with a respect for the administrative point of view, and an orientation toward capital markets. All of the cases are set in 1995 or later; 61 percent are new or updated since the third edition. The downloadable paper outlines the plan of the book and its table of contents. Note: The downloadable document describes the book in more detail with excerpts from the preface and table of contents. Also, an Instructor's Manual containing discussion outlines and case analyses is available on a restricted basis to university instructors upon request to Ms. Barbara Hari, McGraw-Hill/Irwin (mailto:Barbara_Hari@mcgraw-hill.com). A collection of spreadsheet files supporting student and teacher preparation of the cases is available to instructors adopting the book for classroom use.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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31 May 04
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31 May 04
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4,144 (367)
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Applied Mergers and Acquisitions aims to present a one-volume coverage of practice and research in a way that is both pragmatic and rigorous. This document gives an overview of the book and contains the table of contents, a description of associated software, an excerpt from the preface, and an excerpt from Chapter 1 - these give a sense of the perspective taken here. In brief, the book seeks to: - Integrate topics and practices. Surveyed here are ethics, strategy, search, due diligence, valuation, accounting, tax, deal design, negotiation, post-merger integration, and leadership of a business development unit. By combining these aspects in one volume it is possible to show linkages among them and what these linkages mean for practitioners. - Highlight best practices and state of the art. In particular, the book identifies seven new disruptive ideas that are likely to change practice. - Marry research and practice. The book summarizes academic research findings that bear important insights and implications for practitioners. Case examples give practical illustrations of new ideas. The comprehensive list of writings about M&A that is contained in the book can help the practitioner and the scholar understand better the domain and limits of our knowledge. - Promote self-paced discovery and continuing learning. M&A is a complex subject and the nexus of numerous disciplines. This book strives to make accessible the ideas in various areas and to lay the foundation for continued exploration. A workbook entitled, Applied Mergers and Acquisitions: Workbook, (Wiley, 2004) contains chapter summaries and problems with worked-through solutions. A CD-ROM contains templates for quantitative analysis of M&A transactions using approaches outlined in the book, additional written lectures dealing with legal aspects of M&A, and more problems with worked-through solutions.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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14 Aug 03
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09 Jan 04
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3,564 (491)
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Following the largest M&A wave in history, it is appropriate to assess the evidence on the profitability of this activity. One popular view is that merger activity is highly unprofitable. Does research sustain this view? This paper reflects on what it means for M&A to 'pay' and summarizes the evidence from 12 informal studies, 120 scientific studies from 1971 to 2003, and five surveys of the scientific evidence published in 1979, 1983, 1987, 1989, and 1992. This review comments on the several formal and informal research approaches and highlights findings for the broad activity as well as niches of special note. The mass of research suggests that target shareholders earn sizable positive market-returns, that bidders (with interesting exceptions) earn zero adjusted returns, and that bidders and targets combined earn positive adjusted returns. On balance, one should conclude that M&A does pay. But the broad dispersion of findings around a zero return to buyers suggests that executives should approach this activity with caution.
Mergers and Acquisitions, Valuation, Corporate Finance
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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3,101 (616)
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This technical note offers an example of a thoroughly complete pitch book for use as a basis for class discussion and learning. Actual pitch books are almost never made available for public use. This presentation was prepared by a group of Darden students in April 2001 for a jury of M&A executives from United Technologies Corporation who judged this work to be of excellent quality, among the best they had seen in any setting. A separate validation of the deal concept is given in the final exhibit, which records the announcement by General Electric of its acquisition of Heller on July 30, 2001. In reviewing this document, the student must assess both its form and content, from the standpoints of both the presenter and the audience. Why is each exhibit and section included in the document? What analytical work underpins the exhibits? What might explain the presentation format? What oral comments might one offer in making this presentation to a group of executives?
mergers and acquisitions, Management Communications, investment analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Javier Estrada IESE Business School Mark Kritzman Windham Capital Management Wei Li University of Virginia - Darden Graduate School of Business Administration
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23 Nov 02
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23 Nov 02
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SUBJECT AREAS: valuation, investment analysis, portfolio management, country analysis, emerging markets, development economics. This paper gives an overview of research and practice issues in the valuation of assets in emerging markets. It introduces a special edition in Emerging Markets Review devoted to the topic. This volume emerged from a conference sponsored by The Batten Institute at the Darden Graduate Business School of University of Virginia, Association for Investment Management and Research (AIMR), and Emerging Markets Review. The analytic challenges outlined in this paper and special edition are immensely interesting to practitioners and scholars for what they reveal about emerging and developed markets. The colloquium surveyed business and research practices, stimulated critical reflection, and highlighted questions for future research.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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04 Sep 00
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04 Sep 00
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1,589 (2,187)
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SUBJECT AREA: classroom teaching. The new term begins. You introduce yourself, describe the course, and pause to invite questions before starting to teach. It's a moment of buoyancy; you're ready to begin work. Then a student asks a brash question. "What qualifies you to teach this course?" Or "Have you personally done any of the deals (financings, investments, etc.) this course covers?" Or "Have you worked in this industry?" Or, "Do you consult in this area?" Or, "What practical work experience do you have?" Or the showstopper, "If you're so smart, why aren't you rich?" A stillness falls over the room as everyone recognizes that a not-so-subtle challenge has been issued. If you are a newly minted Ph.D., there may not be much work experience to discuss. Or as a senior professor, your work experience may not be quite that relevant or recent. You are on the spot to justify your presence. You briefly contemplate a response that is comparable in rudeness to the query. But instead you search for the right words. What should you say? This column discusses the various origins of the brash question, reflects on some larger lessons for the classroom teacher, and suggests a path for responding. [Past columns by Robert Bruner may be found by search at the SSRN website at: http://papers.ssrn.com/sol3/search.taf or by going to his Author Page at SSRN at: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=66030]
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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09 May 05
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09 May 05
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"Deals from Hell" surveys failure in mergers and acquisitions, drawing on an extensive review of research, original study of 2,804 transactions, and detailed case studies of ten prominent failures. The conclusions challenge conventional wisdom about M&A and enrich our ability to anticipate failure and promote success. Insights from the book include these: - M&A does pay for bidders, on average and over time. But the variance of returns is sizable: you cannot be terribly confident of hitting the average return simply by acquiring naively. Investors and managers should suppress overconfidence and prepare to be disappointed. - The market for acquisitions is highly segmented; returns to investors vary significantly across the segments. For this reason, broad assertions about M&A success and failure are less meaningful. All M&A is local: pay attention to the peculiarities of the deal including its motives, design, context, and implementation. - The detailed comparison of failure cases finds six elements in common. While these elements are individually widespread in the business environment, it is their convergence in the context of a merger that greatly elevates the likelihood of failure. Since merger failure results from a "perfect storm" of factors, failure prevention must attack the systemic combination of factors. The detailed case studies consist of the following: - Merger of the Pennsylvania and New York Central Railroads, 1968. - Leveraged buyout of Revco Drug Stores, 1986. - Acquisition of Columbia Pictures by Sony Corporation, 1989. - Acquisition of NCR Corporation by AT&T Corporation, 1991. - Renault's proposed merger with Volvo, 1993. - Acquisition of Snapple by Quaker Oats, 1994. - Mattel's acquisition of The Learning Company, 1999. - Merger of AOL and Time Warner, 2001. - Dynegy's proposed merger with Enron, 2001. - Acquisition program of Tyco International 2002. Each case study of failure is accompanied by one or more comparison cases that vary in some instructive way. The downloadable document contains the foreword, table of contents, and introductory chapter.
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8.
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Nike, Inc.: Cost of Capital
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Jessica Chan University of Virginia - Darden Graduate School of Business Administration Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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1,377 ( 2,856) |
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Jessica Chan University of Virginia - Darden Graduate School of Business Administration Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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150
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On July 5 2001, Kimi Ford, a portfolio manager at NorthPoint Group, a mutual-fund management firm, pored over analyst write-ups of Nike, Inc., the athletic shoe manufacturer. Nikes share price had declined significantly from the beginning of the year. Ford was considering buying some shares for the fund she managed, the NorthPoint Large-Cap Fund, which was invested mostly in Fortune 500 companies with an emphasis on value investing. Ford had read all the analyst reports that she could find about the June 28th meeting, but the reports gave her no clear guidance. She decided instead to develop her own discounted cash flow forecast to come to a clearer conclusion.
cost of capital, investment analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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1,227
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On July 5 2001, Kimi Ford, a portfolio manager at NorthPoint Group, a mutual-fund management firm, pored over analyst write-ups of Nike, Inc., the athletic shoe manufacturer. Nikes share price had declined significantly from the beginning of the year. Ford was considering buying some shares for the fund she managed, the NorthPoint Large-Cap Fund, which was invested mostly in Fortune 500 companies with an emphasis on value investing. Ford had read all the analyst reports that she could find about the June 28th meeting, but the reports gave her no clear guidance. She decided instead to develop her own discounted cash flow forecast to come to a clearer conclusion.
cost of capital, investment analysis, valuation
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9.
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Diamond Chemicals Ltd. (A): The Merseyside Project
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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21 Oct 08
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1,312 ( 3,093) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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40
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CASE HAS A SPREADSHEET.These two cases consider the capital investment decisions to be made by executives of this large chemicals firm in January 2001. The â¬ÜAâ¬" case presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The â¬ÜBâ¬" case reviews the same project but from one level higher, where the executive faces an either/or investment decision between two mutually exclusive projects. The objective of the two cases is to expose students to a wide range of capital-budgeting issues which includes, among others, the identification of relevant cash flows, the critical assessment of a capital investment evaluation system, the classic â¬Scross-overâ¬? problem, in which project rankings disagree on the basis of net present value (NPV) and internal rate of return (IRR), and the assessment of real option value latent in managerial flexibility to change operating technologies.
capital budgeting, capital investment, relevant costs
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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1,272
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CASE HAS A SPREADSHEET.These two cases consider the capital investment decisions to be made by executives of this large chemicals firm in January 2001. The â¬ÜAâ¬" case presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The â¬ÜBâ¬" case reviews the same project but from one level higher, where the executive faces an either/or investment decision between two mutually exclusive projects. The objective of the two cases is to expose students to a wide range of capital-budgeting issues which includes, among others, the identification of relevant cash flows, the critical assessment of a capital investment evaluation system, the classic â¬Scross-overâ¬? problem, in which project rankings disagree on the basis of net present value (NPV) and internal rate of return (IRR), and the assessment of real option value latent in managerial flexibility to change operating technologies.
capital budgeting, capital investment, relevant costs
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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14 Jun 06
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15 Jun 06
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1,212 (3,573)
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Abstract:
This book presents 50 case studies and technical notes in finance, targeted toward upper-level undergraduates and introductory and intermediate-level MBA students. The purpose of these cases is to afford the basis for classroom discussion of tools and concepts. The range of topics includes value creation, market efficiency, economic profit, financial analysis and forecasting, cost of capital, capital budgeting, dividend policy, equity issuance, capital structure management, derivative securities, and mergers and acquisitions. The spirit of these cases is to link the study of value creation with a respect for the administrative point of view, and an orientation toward capital markets. Three-quarters of the cases are set in 2000 or after; half the cases are set outside of the United States or draw significantly on international issues; 37 percent are new or seriously updated since the fourth edition. A new chapter addresses ethics in finance. Note: The downloadable document describes the book in more detail with excerpts from the preface and table of contents. Also, an Instructor's Manual containing discussion outlines and case analyses is available on a restricted basis to university instructors upon request to Ms. Barbara Hari, McGraw-Hill/Irwin (mailto:Barbara_Hari@mcgraw-hill.com). A collection of spreadsheet files supporting student and teacher preparation of the cases is available to instructors adopting the book for classroom use.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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29 Jan 99
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26 Aug 01
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1,183 (3,708)
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"It's so daunting. I have to listen to the students - just figuring out what I want to say is hard enough. The loss of control doesn't feel right. I just don't know how to begin teaching with cases." Words like these are spoken regularly both by newly-minted Ph.D.s, by veteran lecturers, and anyone confronting the prospect of teaching by the discussion method, using case studies. Experienced case teachers make it seem easy; the problem is how to get started. This column offers some advice of my own, as well as suggestions from a panel of contributors.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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24 Jan 05
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27 Jan 05
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1,177 (3,743)
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How you assess an M&A deal or the whole flow of M&A activity depends on your frame of reference, on beliefs that help you decide whether specific deals represent the average or what statisticians call the tails of the distribution. This frame of reference is a hugely important filter for decision-makers and their advisers, and is typically built on a blend of personal experience, anecdotes, conventional wisdom, and facts. The aim of this chapter is to enrich your frame of reference about success and failure in M&A with the findings of scientific research. Surveyed here are the results of over 130 studies of returns from merger. On average, acquisitions compensate buyers for their cost of funds - in this sense, it appears that M&A pays. But around the average is significant variation in outcomes. This chapter summarizes findings on 18 factors that help to explain the variation in returns to buyers from M&A. One practical implication is that all M&A is local which means that the executive's choices about strategy, deal design, governance, and tailoring of investment opportunities will have a meaningful influence on the success or failure of acquisitions.
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13.
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Euroland Foods S.A.
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Casey Opitz affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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Casey Opitz affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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In January 2001, the senior-management committee of this company has to decide which major projects should be funded for implementation by the company starting in 2001. The board of directors has arbitrarily set a limit of ¬120 million to be spent on capital projects in 2001. Various managers, however, have proposed projects totaling ¬316 million. The task for the student is to evaluate the completed discounted-cash-flow (DCF) analyses that the case presents, together with qualitative factors (mainly strategic considerations and internal politics of the company), and to choose the projects to be approved. The main objectives of this case are (in descending order): (1) to explore the problem of resource allocation within corporations; (2) to illustrate and assess the impact of capital rationing on capital-investment decisions; (3) to exercise and interpret the implications of classic tools of investment analysis (e.g., net present value [NPV], internal rate of return [IRR], payback), and to consider possible adjustments for differences among the projects in risk (e.g., through the use of risk-adjusted discount rates), size (e.g., through the profitability index), and life (e.g., through using equivalent annuities, replacement chains, or both); (4) to consider the impact of behavioral influences on financial decision making.
capital budgeting, capital investment, cash flow, profitability analysis
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Casey Opitz affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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In January 2001, the senior-management committee of this company has to decide which major projects should be funded for implementation by the company starting in 2001. The board of directors has arbitrarily set a limit of ¬120 million to be spent on capital projects in 2001. Various managers, however, have proposed projects totaling ¬316 million. The task for the student is to evaluate the completed discounted-cash-flow (DCF) analyses that the case presents, together with qualitative factors (mainly strategic considerations and internal politics of the company), and to choose the projects to be approved. The main objectives of this case are (in descending order): (1) to explore the problem of resource allocation within corporations; (2) to illustrate and assess the impact of capital rationing on capital-investment decisions; (3) to exercise and interpret the implications of classic tools of investment analysis (e.g., net present value [NPV], internal rate of return [IRR], payback), and to consider possible adjustments for differences among the projects in risk (e.g., through the use of risk-adjusted discount rates), size (e.g., through the profitability index), and life (e.g., through using equivalent annuities, replacement chains, or both); (4) to consider the impact of behavioral influences on financial decision making.
capital budgeting, capital investment, cash flow, profitability analysis
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14.
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Kota Fibres, Ltd.
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Thien Pham affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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Thien Pham affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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In January 2001, the chief executive of this small yarn-production company in India must resolve a surprising cash shortage. The task for the student is to evaluate the causes of this shortage (using a completed "base-case" forecast given in the case) and assess the usefulness of various possible remedies suggested by managers in the company. In essence, the company is unable to liquidate a seasonal working-capital loan for the requisite 30 days each year. This difficulty arises from two classic causes: (1) secular growth of the company and (2) declining profitability. Possible remedies include reducing inventory through more efficient transportation and warehousing, reducing credit terms to customers, being supplied raw materials on a just-in-time raw materials, switching from seasonal to level production, improving profitability, decreasing dividends, and reducing sales growth. The objectives of the case are threefold: (1) To explore a range of issues in working capital management with a primary focus on accounts receivable and inventory. (2) To extend students skills in financial-statement modeling and analysis. This case demonstrates the technique of forecasting with T-accounts, which may be contrasted with percent-of-sales forecasting illustrated in other cases. (3) To illustrate some of the challenges in financial (and general) management of firms in developing countries. These challenges include transportation and logistical problems, the availability of credit to merchants and consumers, high real rates of growth, tax practices of governments, and dramatic swings in demand induced by local customs and holidays.
cash flow, forecasting, inventory management
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Thien Pham affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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In January 2001, the chief executive of this small yarn-production company in India must resolve a surprising cash shortage. The task for the student is to evaluate the causes of this shortage (using a completed "base-case" forecast given in the case) and assess the usefulness of various possible remedies suggested by managers in the company. In essence, the company is unable to liquidate a seasonal working-capital loan for the requisite 30 days each year. This difficulty arises from two classic causes: (1) secular growth of the company and (2) declining profitability. Possible remedies include reducing inventory through more efficient transportation and warehousing, reducing credit terms to customers, being supplied raw materials on a just-in-time raw materials, switching from seasonal to level production, improving profitability, decreasing dividends, and reducing sales growth. The objectives of the case are threefold: (1) To explore a range of issues in working capital management with a primary focus on accounts receivable and inventory. (2) To extend students skills in financial-statement modeling and analysis. This case demonstrates the technique of forecasting with T-accounts, which may be contrasted with percent-of-sales forecasting illustrated in other cases. (3) To illustrate some of the challenges in financial (and general) management of firms in developing countries. These challenges include transportation and logistical problems, the availability of credit to merchants and consumers, high real rates of growth, tax practices of governments, and dramatic swings in demand induced by local customs and holidays.
cash flow, forecasting, inventory management
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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1,011 (4,832)
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In July 2001, a new CEO joins this small manufacturer of CD-ROMs and DVDs to discover that the firm is in the midst of a financial crisis, induced by rapid growth. The CEO asks an analyst for help with five tasks: (1) review historical performance of the firm; (2) forecast financing requirements for the next two years; (3) exercise the forecasting model to identify â¬Skey driverâ¬? assumptions; (4) estimate Star Riverâ¬"s weighted average cost of capital; and (5) analyze a proposed investment in a packaging machine. The analyst must offer insights and recommendations based on the work. The aim of the case is to exercise studentsâ¬" abilities in financial forecasting and analysis and in the analysis of capital projects. Generally, the case offers a good omnibus review of foundational tools and concepts.
capital investment, forecasting, ratio analysis
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Mark Kritzman Windham Capital Management Wei Li University of Virginia - Darden Graduate School of Business Administration Elizabeth F. O'Halloran University of Virginia - Darden Schoool of Business
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23 Nov 02
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23 Nov 02
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1,009 (4,843)
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Abstract:
SUBJECT AREAS: valuation, investment analysis, portfolio management, country analysis, emerging markets, development economics. This collection of two CD-ROMs presents interviews with leading scholars and practitioners on the subject of valuing assets in emerging markets. Featured interviews include, Michael A. Duffy, Ph.D., CFA, Managing Director, Emerging Markets Management, Vihang Errunza, Bank of Montreal Chair in Finance and Baking, Faculty of Management, McGill University, Marc Faber, Ph.D., Managing Director, Marc Faber Limited, Kristin J. Forbes, Mitsubishi Associate Professor of International Management, Sloan School of Management, and former deputy assistant secretary for the US Department of the Treasury , Campbell R. Harvey, J. Paul Sticht Professor of International Business, Fuqua School of Business, Duke University, George R. Hoguet, CFA, Head, Active Emerging Markets, Global Active Equity, State Street Global Advisors, Mark Mobius, Ph.D., Managing Director, Templeton Asset Management, Mehran Nakjavani, Executive Director and Co-Head of Emerging Markets, UBS Global Asset Management, Marc Zenner, Ph.D., CFA, Salomon Smith Barney/Citigroup). The CDs also contain pdf files of papers and presentations given at the conference, "Valuation in Emerging Markets," at the Batten Institute of the Darden Graduate Business School, University of Virginia, on May 28-30, 2002. The downloadable document gives a detailed outline of the interviews and papers contained on the CD-ROM. These CD-ROMs serve at least three objectives: - Provide a learning resource on valuation in emerging markets usable in educational settings such as BBA, MBA, and doctoral courses. - Support executive and professional training for self-learners and distance learners. - Rapidly disseminate state-of-the-art ideas to scholarly researchers and professionals focusing on valuation and emerging markets. The Batten Institute will hold an annual conference on investing in emerging markets. The next conference will be held in Charlottesville, Virginia from the evening of May 28 to noon, May 30, 2003. The focus of this next conference will be corporate governance and organization as they affect the pricing of equities in emerging markets. Michael Jensen will be the keynote speaker at this next conference. Program information and registration details may be found at the Batten Institute website.
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17.
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Warren E. Buffett, 2005
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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974 ( 1,953) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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65
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Abstract:
On May 24, 2005, Warren Buffett, the chair and chief executive officer of Berkshire Hathaway Inc., announced that MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, would acquire the electric utility PacifiCorp. In Buffetts largest deal since 1998, and the second largest of his entire career, MidAmerican would purchase PacifiCorp from its parent, Scottish Power plc, for $5.1 billion in cash and $4.3 billion in liabilities and preferred stock. The acquisition of PacifiCorp renewed public interest in its sponsor, Warren Buffett. In many ways, he was an anomaly. What were the key principles that guided Buffett? Could these be broadly applied in the 21st century, or were they unique to Buffett and his time? From an understanding of these principles, analysts hoped to illuminate the acquisition of PacifiCorp. What were Buffetts probable motives in the acquisition? What did Buffetts offer say about his valuation of PacifiCorp, and how would it compare with valuations for other regulated utilities? Would Berkshires acquisition of PacifiCorp prove to be a success? How would Buffett define success?
cash flow, efficient markets, investment analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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909
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Abstract:
On May 24, 2005, Warren Buffett, the chair and chief executive officer of Berkshire Hathaway Inc., announced that MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, would acquire the electric utility PacifiCorp. In Buffetts largest deal since 1998, and the second largest of his entire career, MidAmerican would purchase PacifiCorp from its parent, Scottish Power plc, for $5.1 billion in cash and $4.3 billion in liabilities and preferred stock. The acquisition of PacifiCorp renewed public interest in its sponsor, Warren Buffett. In many ways, he was an anomaly. What were the key principles that guided Buffett? Could these be broadly applied in the 21st century, or were they unique to Buffett and his time? From an understanding of these principles, analysts hoped to illuminate the acquisition of PacifiCorp. What were Buffetts probable motives in the acquisition? What did Buffetts offer say about his valuation of PacifiCorp, and how would it compare with valuations for other regulated utilities? Would Berkshires acquisition of PacifiCorp prove to be a success? How would Buffett define success?
cash flow, efficient markets, investment analysis, valuation
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18.
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The Financial Detective, 2005
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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944 ( 5,424) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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55
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Abstract:
The case presents the student with financial ratios for eight pairs of unidentified companies and asks them to mate the description of the company with the financial profile derived from the ratios. The primary objective of this case is to introduce students to financial ratio analysisin particular, the range of ratios and the insights each one affords. This case presumes that students have already been introduced to the definitions of various financial ratios through other readings or lectures. The structured exploration of pairs of companies within an industry affords a number of important insights into strategy and financial performance. First, the economics of individual industries account for significant variations in financial ratios because of differences in technologies, product characteristics, or competitive structures. Second, financial performance results from managerial choices: within industries, the wide variation in financial ratios is often a result of the differences in corporate strategy in marketing, operations, and finance. For those reasons, this case is a good springboard into subsequent classes, which deal with the interaction of strategy and financial performance.
financial ratios, strategy formulation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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889
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Abstract:
The case presents the student with financial ratios for eight pairs of unidentified companies and asks them to mate the description of the company with the financial profile derived from the ratios. The primary objective of this case is to introduce students to financial ratio analysisin particular, the range of ratios and the insights each one affords. This case presumes that students have already been introduced to the definitions of various financial ratios through other readings or lectures. The structured exploration of pairs of companies within an industry affords a number of important insights into strategy and financial performance. First, the economics of individual industries account for significant variations in financial ratios because of differences in technologies, product characteristics, or competitive structures. Second, financial performance results from managerial choices: within industries, the wide variation in financial ratios is often a result of the differences in corporate strategy in marketing, operations, and finance. For those reasons, this case is a good springboard into subsequent classes, which deal with the interaction of strategy and financial performance.
financial ratios, strategy formulation
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19.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert S. Harris University of Virginia - Darden Graduate School of Business Administration Michael P. Dooley University of Virginia School of Law Paul G. Mahoney University of Virginia School of Law
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26 Oct 99
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Last Revised:
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19 Aug 09
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933 (5,535)
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Abstract:
Overview This course is intended to provide a capstone experience in corporate finance for second-year MBA students, and for upper-level law students. Nicknamed "Doing Deals" by the students, the course consists of a series of simulations in which teams of students attempt to consummate corporate financial transactions such as a friendly bilateral merger, a reorganization in bankruptcy, and a hostile takeover. Grades are based on written documents and oral presentations prepared for the transactions, and on peer reviews and faculty observations of student contributions during negotiations. The interdisciplinary combination of law and business students on transaction teams emulates the real world, and challenges students in both schools to reach beyond their narrow disciplines to contribute effectively to the deal-doing process. Lawyers must focus on the needs of the clients. Business students must engage legal expertise to structure and consummate value creating transactions. Though challenging and time-intensive for the students, this course has been among the highest rated offerings at both schools since its inception. DOWNLOAD DOCUMENT BELOW FOR COMPLETE COURSE DESIGN.
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20.
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Teletech Corporation, 2005
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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929 ( 5,579) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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48
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Abstract:
In October 2005, the chief financial officer of a telecommunications company must fashion a response to a corporate raider who claims that a major business segment of this company should be sold because it is not earning a satisfactory rate of return. The case recounts the debate within the company over the use of a single hurdle rate to evaluate all segments of the company versus a risk-adjusted hurdle-rate system. The tasks for the student are to resolve the debate, estimate the weighted-average costs of capital (WACC) for Teletechâ¬"s two business segments, and respond to the raider. The case was prepared to serve as part of an introduction to estimating investorsâ¬" required rates of return. It would best follow one or two class sessions introducing techniques for estimating WACC. The numerical calculations required are light, though some of the subtleties about the use of risk-adjusted hurdle rates will require time for the novice to absorb.â¬?
cost of capital
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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881
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Abstract:
In October 2005, the chief financial officer of a telecommunications company must fashion a response to a corporate raider who claims that a major business segment of this company should be sold because it is not earning a satisfactory rate of return. The case recounts the debate within the company over the use of a single hurdle rate to evaluate all segments of the company versus a risk-adjusted hurdle-rate system. The tasks for the student are to resolve the debate, estimate the weighted-average costs of capital (WACC) for Teletechâ¬"s two business segments, and respond to the raider. The case was prepared to serve as part of an introduction to estimating investorsâ¬" required rates of return. It would best follow one or two class sessions introducing techniques for estimating WACC. The numerical calculations required are light, though some of the subtleties about the use of risk-adjusted hurdle rates will require time for the novice to absorb.â¬?
cost of capital
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21.
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Gainesboro Machine Tools Corporation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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927 ( 5,609) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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25
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Abstract:
In mid September 2005, Ashley Swenson, the chief financial officer of this large CAD/CAM (computer aided design and manufacturing) equipment manufacturer must decide whether to pay out dividends to the firms shareholders, or repurchase stock. If Swenson chooses to pay out dividends, she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising, and change its corporate name to reflect its new outlook. The case serves as an omnibus review of the many practical aspects of the dividend and share buyback decisions, including (1) signaling effects, (2) clientele effects, and (3) finance and investment implications of increasing dividend payout and share repurchase decisions. This case can follow a treatment of the Miller Modigliani dividend-irrelevance theorem and serves to highlight practical considerations in setting dividend policy.
corporate financial strategy, capital markets
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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902
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Abstract:
In mid September 2005, Ashley Swenson, the chief financial officer of this large CAD/CAM (computer aided design and manufacturing) equipment manufacturer must decide whether to pay out dividends to the firms shareholders, or repurchase stock. If Swenson chooses to pay out dividends, she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising, and change its corporate name to reflect its new outlook. The case serves as an omnibus review of the many practical aspects of the dividend and share buyback decisions, including (1) signaling effects, (2) clientele effects, and (3) finance and investment implications of increasing dividend payout and share repurchase decisions. This case can follow a treatment of the Miller Modigliani dividend-irrelevance theorem and serves to highlight practical considerations in setting dividend policy.
corporate financial strategy, capital markets
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22.
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Rosario Acero S.A. (V. 1.2)
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN Renee Weaver affiliation not provided to SSRN
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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926 ( 5,659) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN Renee Weaver affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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40
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Abstract:
In March 1997, the board chair of this small steel mill is pondering how to finance the growth of his firm: either with an initial public offering of equity or a private placement of 8-year senior notes with warrants. The task for the student is to sort out the comparative advantages and disadvantages of each alternativeincluding valuing the possible securitiesand recommend a course of action.
valuation, warrants, initial public offering, voting paradox
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN Renee Weaver affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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886
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Abstract:
In March 1997, the board chair of this small steel mill is pondering how to finance the growth of his firm: either with an initial public offering of equity or a private placement of 8-year senior notes with warrants. The task for the student is to sort out the comparative advantages and disadvantages of each alternativeincluding valuing the possible securitiesand recommend a course of action.
valuation, warrants, initial public offering, voting paradox
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23.
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The Wm. Wrigley Jr. Company: Capital Structure, Valuation, and Cost of Capital
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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|
21 Oct 08
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Last Revised:
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21 Oct 08
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891 ( 1,549) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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107
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Abstract:
In June 2002, a managing director of an â¬Sactive investorâ¬? hedge fund is considering the possible gains from increasing the debt capitalization of The Wm. Wrigley Jr. Company. Wrigley has been conservatively financed, and at the date of the case, carries no debt. The tasks for the student are to: ⬢ Estimate the potential change in value from re-levering Wrigley using adjusted present value analysis; ⬢ Assess the impact on weighted average cost of capital, earnings per share, the credit rating of the firm, and voting control of the Wrigley family;⬢ Consider the merits of dividend or share repurchase as a means of returning cash to shareholders.The central teaching objective of the case is to explore the financial effects of capital structure change. Key here is the trade-off between the tax benefits of debt and the associated costs in the form of financial distress and loss of flexibility. Related issues include signaling to investors, clientele effects (control considerations for the Wrigley family), and incentives created for directors and managers. Finally, the case affords a comparison of dividends and share repurchases.
capital structure, leverage, ratio analysis
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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784
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Abstract:
In June 2002, a managing director of an â¬Sactive investorâ¬? hedge fund is considering the possible gains from increasing the debt capitalization of The Wm. Wrigley Jr. Company. Wrigley has been conservatively financed, and at the date of the case, carries no debt. The tasks for the student are to: ⬢ Estimate the potential change in value from re-levering Wrigley using adjusted present value analysis; ⬢ Assess the impact on weighted average cost of capital, earnings per share, the credit rating of the firm, and voting control of the Wrigley family;⬢ Consider the merits of dividend or share repurchase as a means of returning cash to shareholders.The central teaching objective of the case is to explore the financial effects of capital structure change. Key here is the trade-off between the tax benefits of debt and the associated costs in the form of financial distress and loss of flexibility. Related issues include signaling to investors, clientele effects (control considerations for the Wrigley family), and incentives created for directors and managers. Finally, the case affords a comparison of dividends and share repurchases.
capital structure, leverage, ratio analysis
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24.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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887 (6,054)
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Abstract:
Set in May 2000, these cases reflect the separate perspectives of the CEOs as they approach the negotiations of TSE International to acquire Yeats Valves. The task for the student is to complete a valuation analysis of the target and buyer, and to negotiate a price and exchange ratio with the counterparty. Each case contains a financial forecast only for that side; therefore, an important element in the negotiation is to obtain the private information of the other side, analyze it, and successfully negotiate terms of acquisition. The cases are relatively simple, and are offered as a first exercise in the valuation of the firm, and negotiation of an acquisition. They may be taught singly in usual case-discussion fashion, or combined into a joint-negotiation exercise where students are assigned parts to play. Used in a bilateral bargaining exercise, two teams of students are designated, each team representing one side of the negotiation and receiving a case designed for that team. The bargaining exercise provides a particular opportunity for joint teaching among instructors in finance, strategy, human behavior, and negotiation.
bargaining and negotiating, valuation, exchange ratio
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25.
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Package War: Fedex Vs. Ups
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Lane Crowder affiliation not provided to SSRN
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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869 ( 6,282) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Lane Crowder affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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36
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Abstract:
This case allows students to observe two competing businesses transform themselves over time. By following the competitive actions and reactions over more than 10 years, students gain an appreciation for how rivals raise the competitive ante, search for new ways to add customer value, and come to realize that sustaining a competitive advantage is difficult.
competitive analysis, competitive decision making, competitive dynamics, customer service
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Lane Crowder affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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833
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Abstract:
This case allows students to observe two competing businesses transform themselves over time. By following the competitive actions and reactions over more than 10 years, students gain an appreciation for how rivals raise the competitive ante, search for new ways to add customer value, and come to realize that sustaining a competitive advantage is difficult.
competitive analysis, competitive decision making, competitive dynamics, customer service
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26.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Anna D. Buchanan University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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866 (6,351)
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Abstract:
In 2002, a money manager is considering how to vote her shares in Hewlett-Packard on the proposal to merge with Compaq. The A case presents information about the strategic and financial motivations of the merger. Included are completed valuations of both HP and Compaq and detailed summaries of the leading advocate (Carly Fiorina) and critic (Walter Hewlett). The tasks for the student are to value the prospective synergies in the deal and critically assess the strategic arguments (pro and con). The B case (UVA-F-1451) affords a detailed examination of the terms of the proposed merger. The tasks for the student are to critically assess the specific design of the deal and its impact on shareholders. Of particular interest are the impact on earnings per share (i.e., EPS dilution), the governance of the new firm, and whether this is, indeed, a merger of equals. The C case (UVA-F-1452) describes the outcome of the proxy contest. The task for the student is to evaluate the strategies of each side in communicating with shareholders and presenting arguments. The objectives of the case module are to expose students to the mechanics of proxy contests, exercise skills in valuation and strategic analysis, and critically evaluate deal terms. The A and B cases can be taught in sequential classes or in one class. The C case is typically distributed at the end, followed by a brief discussion.
mergers and acquisitions, valuation, post merger integration
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27.
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Daimler-Benz A.G.: Negotiations between Daimler and Chrysler
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Melinda Davies affiliation not provided to SSRN Brian Kannry affiliation not provided to SSRN Petra Christmann Rutgers, The State University of New Jersey - Management & Global Business
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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832 ( 6,707) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Melinda Davies affiliation not provided to SSRN Brian Kannry affiliation not provided to SSRN Petra Christmann Rutgers, The State University of New Jersey - Management & Global Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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40
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Abstract:
This case may be taught singly or used as a merger-negotiation exercise with "Chrysler Corporation: Negotiations between Daimler and Chrysler" (UVA-F-1240). Set in February 1998, the case places students in the position of negotiators for the company; their task is to value both firms, assess the potential earnings dilution of a combination, and negotiate a detailed agreement with their counterpart. The case can be used to explore such interesting negotiation issues as determination of a share-exchange ratio, treatment of major stockholders, and structuring a deal. Also, the case and exercise can be used to spark a discussion of acquisition in comparison with strategic alliance, or other less formal models of combination.
mergers and acquisitions, strategic alliance, negotiation, valuation, cross-border investment
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Melinda Davies affiliation not provided to SSRN Brian Kannry affiliation not provided to SSRN Petra Christmann Rutgers, The State University of New Jersey - Management & Global Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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792
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Abstract:
This case may be taught singly or used as a merger-negotiation exercise with "Chrysler Corporation: Negotiations between Daimler and Chrysler" (UVA-F-1240). Set in February 1998, the case places students in the position of negotiators for the company; their task is to value both firms, assess the potential earnings dilution of a combination, and negotiate a detailed agreement with their counterpart. The case can be used to explore such interesting negotiation issues as determination of a share-exchange ratio, treatment of major stockholders, and structuring a deal. Also, the case and exercise can be used to spark a discussion of acquisition in comparison with strategic alliance, or other less formal models of combination.
mergers and acquisitions, strategic alliance, negotiation, valuation, cross-border investment
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28.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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828 (6,753)
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Abstract:
These two cases consider the capital-investment decisions facing executives of this large chemicals firm in January 2001. The A case (UVA-F-1351) presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The B case reviews the same project but from one level higher, where the executive faces an either-or investment decision between two mutually exclusive projects. The objective of the two cases is to expose students to a wide range of capital-budgeting issues, including the identification of relevant cash flows; the critical assessment of a capital-investment evaluation system; the classic "crossover" problem, in which project rankings disagree on the basis of net present value (NPV) and internal rate of return (IRR); and the assessment of real-option value latent in managerial flexibility to change operating technologies.
capital budgeting, capital investment, relevant costs
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29.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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29 Jan 02
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Mrs. Teasdale: "I was with my husband to the very end." Groucho Marx: "Huh! No wonder he passed away." Mrs. Teasdale: "I held him in my arms and kissed him." Groucho Marx: "Oh, I see. Then it was murder." -- Duck Soup, 1933 "This I conceive to be the chemical function of humor: to change the character of our thought." -- Lin Yutang In his classic film, Duck Soup, Groucho Marx transforms a widow's conventional words of sorrow into a take-off on the American phrase, "If looks could kill..." He shows how humor can change the way one thinks about problems and situations. Lin Yutang calls the transformational effect of humor, "chemical," suggesting the effect of a catalyst, perhaps silent but inexorable and often dramatic. Teaching is all about transforming a student's thinking. Therefore, humor belongs in the teaching toolkit, and deserves to be used frequently. The problem is that the substance of what most instructors have to teach isn't very funny. Effective use of humor, therefore, must rely on delivery. Nothing in one's professional training prepares for this. Yet great teachers display the ability to use humor effectively in the pursuit of learning. Where does one acquire such skills? How should humor be used? What traps are to be avoided? This column reflects on these and related questions.
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30.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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19 Jun 01
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16 Sep 02
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795 (7,187)
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The question, ("How much work . . . ?") arises at inopportune moments and carries shadings of complaint, rebuke, resistance, and negotiation from the student. You may be just launching the course. Or perhaps the course has entered a stretch of heavy lifting. Or the students need to extend their reach in order to grasp a great idea. You size up the student and see a novice who is clueless and thrashing about, or a gifted amateur-type who feigns indifference about making an effort, or an education theorist who argues that "less is more," or a night-school student who is juggling job, family, and education. Perhaps the student points to the supposedly low level of work required in the course next door (or the course last year or at another school) as a benchmark for how much one should prepare in your course now. You have made a reasonable effort to align the workload of the course with the course credit, but the question suggests you failed. You value education through self-learning, but the student seems to want to get it on the cheap. You remember the long lonely self-preparation of doctoral studies, or some take-no-prisoners experiences of professional life: negotiating for relief was not a possibility, and complaint would land you on the street. You want to remain in control of your own course, and resent the attempt to bargain for a revision in terms. You would love to at least ignore the question, but can't. How you respond has big implications since decent student preparation is the sine qua non of a successful class and course. This column offers some ideas, resources, and a hypothetical response.
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31.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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767 (7,592)
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Set in December 2000, immediately following the merger announcement between PepsiCo Inc. and the Quaker Oats Company, this case asks students to examine the implications of the merger for the rivalry between Coca-Cola Co. and PepsiCo, and for value creation by each firm. Because the merger would allow PepsiCo to control Gatorade, which held an 83% share in the sports drink market, PepsiCo would further strengthen its already-wide lead over Coca-Cola Co. in the noncarbonated drinks segment. Would Coca-Colas historically stellar performance in terms of value creation be threatened by the merger? The case asks students to estimate EVA TM (Economic Value Added) from 2001 to 2003, and provides income statement and balance sheet forecasts to aid in this task. Students also need to determine each companys weighted average cost of capital (WACC) in order to estimate EVA. The primary objective of this case is to introduce students to the concepts and calculation of WACC and EVA.
cost of capital
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32.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Stephen R. Foerster University of Western Ontario - Richard Ivey School of Business
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30 Jan 04
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30 Jan 04
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729 (8,243)
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Writing good business case studies can be learned but doing so is never simple. So where should one begin with the seemingly daunting task of becoming a case writer? Our aim in this note is to offer a brief overview that can help to jump-start one's case writing efforts. We offer some thoughts on the ingredients of a great case and how you can create one. Our hope is to stimulate more case teachers to embark on the case writing adventure.
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33.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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01 Aug 01
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01 Aug 01
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724 (8,324)
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A student writes an exam that follows your lecture notes perfectly, but misses a critical variation in the exam question causing the results to err markedly. Another student recites a formula from memory, but cannot interpret it. A third student, a technician, reliably offers numerical analysis in class, but rarely questions assumptions or recommends decisions. A fourth student usually approaches you after class to verify "the right answer" to the case discussion. A fifth student uses student notes based on your discussion of the same case last year, and considers copying a paper from the Internet for the final paper in your course. These behaviors challenge the teacher who cares about helping the student master subjects for professional life. A variety of forces drive these behaviors, but they probably have in common what social psychologist Ellen J. Langer calls mindlessness. If "professional mastery" means anything, it must include the ability to generate original work, to accommodate expected variations in problems, to reach outside of zones of familiarity (such as "the numbers"), to focus on process rather than outcomes, or to accept the possibility of no single right answer - all of this requires mindful learning. This column discusses mindless learning, recommends some readings, and suggests ways of building a more mindful learning attitude among students.
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34.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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29 Jun 05
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11 Jul 05
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719 (8,428)
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Many instructors struggle with the role of rapport in teaching. For some, the response is a cool and distant teaching style. This essay argues that a style of appropriate warmth can promote student learning. It offers definitions, examples, and implications for the instructor.
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35.
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Introduction to Debt Policy and Value
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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707 ( 8,676) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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49
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This note is intended to provide an interactive illustration of the Modigliani-Miller theory of the effect of debt tax shields on the value of the levered firm.
debt policy, financial policy, leverage, liability management, tax issues
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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658
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Abstract:
This note is intended to provide an interactive illustration of the Modigliani-Miller theory of the effect of debt tax shields on the value of the levered firm.
debt policy, financial policy, leverage, liability management, tax issues
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36.
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Boeing 777
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Dena Gollish affiliation not provided to SSRN Henrik Clausen affiliation not provided to SSRN Niels Koggersbol affiliation not provided to SSRN Peter Christey affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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694 ( 8,896) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Dena Gollish affiliation not provided to SSRN Henrik Clausen affiliation not provided to SSRN Niels Koggersbol affiliation not provided to SSRN Peter Christey affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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45
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Abstract:
The general objective of this case is to exercise students' skills in estimating a weighted-average cost of capital and cost of equity. The specific need to estimate a segment WACC draws out students' abilities to critique different estimates of beta and to manipulate the levered-beta formulas. Thus, the case provides a complete menu of capital cost estimation opportunities.
capital asset pricing model, capital budgeting, capital investment, competitive analysis, cost of capital, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Dena Gollish affiliation not provided to SSRN Henrik Clausen affiliation not provided to SSRN Niels Koggersbol affiliation not provided to SSRN Peter Christey affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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649
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Abstract:
The general objective of this case is to exercise students' skills in estimating a weighted-average cost of capital and cost of equity. The specific need to estimate a segment WACC draws out students' abilities to critique different estimates of beta and to manipulate the levered-beta formulas. Thus, the case provides a complete menu of capital cost estimation opportunities.
capital asset pricing model, capital budgeting, capital investment, competitive analysis, cost of capital, valuation
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37.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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07 Nov 01
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07 Nov 01
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659 (9,541)
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Abstract:
SUBJECT AREA: classroom teaching. "Eighty percent of the art of life is showing up." -- Woody Allen Someone asked Henry Fonda to offer a sound-bite for the most important thing that a young actor should know. Fonda replied, "How to become an old actor." In the highly competitive world of the theatre, becoming an old actor involves more than just showing up for work. There is no guarantee of getting a booking. The critics have a short memory. To approach each new role afresh takes energy and inspiration. In this light, Woody Allen's famous quip seems like dubious advice for the development of professionals. Markets for professional talent do not give much weight simply to showing up. Consider the experience of baseball player, Cal Ripken, who played 2,632 consecutive games over a 20 year career, setting a new record. What the fans celebrate about him is not simply that he "showed up" but that he played consistently well enough for the coaches to put him in the game time after time. The relevant question for teachers is how to achieve a similar kind of consistency? Renewal involves more than getting a good night's sleep or mastering basic classroom techniques. If it were easy, we would all be Cal Ripkens in our respective fields. The challenge must be in what to renew, and how. Crafting a process of self-renewal and growth is at the heart of becoming an old actor, an old baseball player, and an old teacher. My previous columns have emphasized that great professionals carry a learning attitude into their work, and fasten onto interesting variations as exercises in maintaining a keen edge. This month's column offers a "top ten" list of experiences a teacher can use to renew and grow over time.
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38.
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Ethics in Finance
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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656 ( 9,610) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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45
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This note reflects on the role of ethics in the field of finance.
ethical issues, finance, introduction
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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611
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Abstract:
This note reflects on the role of ethics in the field of finance.
ethical issues, finance, introduction
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39.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Herwig Langohr INSEAD - Finance
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21 Oct 08
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21 Oct 08
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653 (9,725)
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Abstract:
In 1989, the Walt Disney Company financed its major European theme park and real estate development using a variety of financing tools and techniques that, when bundled together, amounted to a project financing. The case recounts the details of this financing and invites students to evaluate the financing from various standpoints, including those of the Walt Disney Company, the government of France, European equity investors, and European banks. The resulting opinion about the attractiveness of the project ultimately hinges on beliefs about European market demand for an American-style theme park. The case may be used to exercise students' skills in valuation analysis, to illustrate techniques for financing major real-property projects, and to explore the creation and transfer of wealth in such projects.
financial policy, forecasting, international business, project finance, restructuring, international case, diversity case, valuation, international
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40.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Miguel Palacios Vanderbilt University -- Owen Graduate School of Management
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31 May 04
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31 May 04
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635 (10,050)
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1
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Abstract:
This study explores the value of control and marketability rights and illuminates how discounts for non-marketability and lack of control might be estimated. Such discounts are prominent issues in corporate valuation and shareholder litigation. Using simulation analysis, the study reports estimated discounts using conventional assumptions and assesses the relative effects of two different aspects of control: strategic flexibility (the right to change the strategy of the firm), and private benefits (the right to expropriate the wealth of minority shareholders). Simulation reveals a number of fresh insights including that control and marketability effects interact in a complex way not well described by conventional treatments of them; that control effects dominate marketability effects; that the minority discount grows larger with the range of strategic choices and smaller with the correlation among strategic alternatives. The study simulates the discount for non-marketability and lack of control in the aborted merger of Volvo and Renault and finds estimates consistent with observed values.
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41.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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30 Aug 99
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26 Aug 01
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633 (10,102)
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1
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Abstract:
Professor C. Roland Christensen, once remarked that the management of beginnings and endings was among the most important, but least appreciated, professional skills. Professors are trained to focus on the substantive middle, the beef, as it were, in the intellectual burger. All too often the buns must fend for themselves. Such neglect can be costly. A faulty start to a course can create a legacy that will haunt the instructor for the rest of the course, or worse. A bad beginning makes a bad ending said Euripides. The reality is that first impressions are hugely important within the classroom. How can one get a course launched well? Several instructors shared ideas with me; their comments addressed a variety of aims and tactics.
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42.
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Investment Detective
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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21 Oct 08
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21 Oct 08
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594 ( 11,099) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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33
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Abstract:
Students must evaluate eight projects' cash flows and rank the projects in terms of their economic attractiveness. Students can use all possible criteria [net present value (NPV), internal rate of return (IRR), return on investment (ROI), profitability index, and payback]. This case introduces the valuation and comparison of capital investments. With advanced students, the case can be used to review the effects of unequal project lives and uncertain discount rates. Student and instructor worksheet files are available for use with the case and teaching note.
capital budgeting, capital investment, cash flow, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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561
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Abstract:
Students must evaluate eight projects' cash flows and rank the projects in terms of their economic attractiveness. Students can use all possible criteria [net present value (NPV), internal rate of return (IRR), return on investment (ROI), profitability index, and payback]. This case introduces the valuation and comparison of capital investments. With advanced students, the case can be used to review the effects of unequal project lives and uncertain discount rates. Student and instructor worksheet files are available for use with the case and teaching note.
capital budgeting, capital investment, cash flow, valuation
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43.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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29 Jul 02
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30 Jul 02
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590 (11,227)
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Abstract:
The mission of this book is to help university-level instructors promote more effective professional learning by students through discussions. In 38 brief chapters, the book provides mini-cases for the reader's own reflection, surveys core ideas underpinning discussion leadership, outlines strategies for developing case teaching skills, highlights techniques of shaping the learning experience for students, and lends support for responding to various challenges. Written in a direct and conversational style, the book offers insights for both the novice and experienced case teacher.
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44.
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Teletech Corporation, 1996
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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574 ( 11,706) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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17
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Abstract:
In January 1996, the chief financial officer must fashion a response to a raider who claims that a major business segment of the company should be sold because it is not earning a satisfactory rate of return (ROR). The case recounts the debate within the company over the use of a single hurdle rate to evaluate all segments of the company versus a risk-adjusted hurdle rate system. The students' tasks are to resolve the debate, estimate weighted-average costs of capital (WACC) for the two business segments, and respond to the raider. Because the case was prepared to serve as part of an introduction to estimating investors' required rates of return, it would best follow one or two class sessions introducing techniques for estimating WACC. Although the numerical calculations required are light, some of the subtleties about the use of risk-adjusted hurdle rates will require time for the novice to absorb. The case can be used to pursue a variety of teaching objectives, including (1) extending risk return (i.e., mean variance) analysis to corporate finance; (2) surveying classic arguments for and against the use of risk-adjusted hurdle rate systems; (3) assessing the assumptions and limitations of risk-adjusted hurdle rate systems; (4) exercising the estimation of segment WACCs; and (5) considering possible organizational barriers to the implementation of risk-adjusted hurdle rates.
acquisitions, capital budgeting, cost of capital, mergers, performance evaluation, takeovers, valuation, diverse protagonist, gender (female protagonist)
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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557
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Abstract:
In January 1996, the chief financial officer must fashion a response to a raider who claims that a major business segment of the company should be sold because it is not earning a satisfactory rate of return (ROR). The case recounts the debate within the company over the use of a single hurdle rate to evaluate all segments of the company versus a risk-adjusted hurdle rate system. The students' tasks are to resolve the debate, estimate weighted-average costs of capital (WACC) for the two business segments, and respond to the raider. Because the case was prepared to serve as part of an introduction to estimating investors' required rates of return, it would best follow one or two class sessions introducing techniques for estimating WACC. Although the numerical calculations required are light, some of the subtleties about the use of risk-adjusted hurdle rates will require time for the novice to absorb. The case can be used to pursue a variety of teaching objectives, including (1) extending risk return (i.e., mean variance) analysis to corporate finance; (2) surveying classic arguments for and against the use of risk-adjusted hurdle rate systems; (3) assessing the assumptions and limitations of risk-adjusted hurdle rate systems; (4) exercising the estimation of segment WACCs; and (5) considering possible organizational barriers to the implementation of risk-adjusted hurdle rates.
acquisitions, capital budgeting, cost of capital, mergers, performance evaluation, takeovers, valuation, diverse protagonist, gender (female protagonist)
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45.
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The Boeing 7e7
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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568 ( 3,028) |
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James Tompkins affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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73
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Abstract:
The task for students is to evaluate the 7E7 project against a financial standard, the investors' required returns. The case gives internal rates of return (IRR) for the 7E7 project under base case and alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing's commercial-aircraft business segment in order to evaluate these IRRs. As a result of this analysis the students identify the "key value drivers" and distinguish, on a qualitative basis, the key gambles Boeing is making. The general objective of this case is to exercise students' skills in estimating a weighted average cost of capital and cost of equity. The need for students to estimate a segment WACC draws out their abilities to critique different estimates of beta and to manipulate the levered-beta formulas. Boeing competes in both the commercial aircraft and defense business; thus, deriving the appropriate benchmark WACC for the 7E7 project requires isolating the commercial aircraft component from Boeing's overall corporate WACC. In doing so, students engage the concept of value additivity.
capital budgeting, investment analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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495
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Abstract:
The task for students is to evaluate the 7E7 project against a financial standard, the investors' required returns. The case gives internal rates of return (IRR) for the 7E7 project under base case and alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing's commercial-aircraft business segment in order to evaluate these IRRs. As a result of this analysis the students identify the "key value drivers" and distinguish, on a qualitative basis, the key gambles Boeing is making. The general objective of this case is to exercise students' skills in estimating a weighted average cost of capital and cost of equity. The need for students to estimate a segment WACC draws out their abilities to critique different estimates of beta and to manipulate the levered-beta formulas. Boeing competes in both the commercial aircraft and defense business; thus, deriving the appropriate benchmark WACC for the 7E7 project requires isolating the commercial aircraft component from Boeing's overall corporate WACC. In doing so, students engage the concept of value additivity.
capital budgeting, investment analysis, valuation
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46.
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Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration John Vaccaro affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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21 Oct 08
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568 (11,860)
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Abstract:
CASE HAS A SPREADSHEETIn this case the student is cast into the role of adviser to Anita Roddick, the managing director of The Body Shop. The student must prepare a three-year forecast of the firms income statement and balance sheet. The case is intended to provided a first-time introduction to percentage-of-sales forecasting and walks the student through the preparation of a simplified forecast, first using pencil and paper, then a spreadsheet program on the personal computer. The case emphasizes the importance of being able to talk plainly about ones financial forecast and the insights that are of use to the general manager.
corporate financial strategy, financial analysis, forecasting
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47.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Anna D. Buchanan University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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567 (11,934)
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Abstract:
In 2002, a money manager is considering how to vote her shares in Hewlett-Packard on the proposal to merge with Compaq. The A case (UVA-F-1450) presents information about the strategic and financial motivations of the merger. Included are completed valuations of both HP and Compaq and detailed summaries of the leading advocate (Carly Fiorina) and critic (Walter Hewlett). The tasks for the student are to value the prospective synergies in the deal and critically assess the strategic arguments (pro and con). The B case affords a detailed examination of the terms of the proposed merger. The tasks for the student are to critically assess the specific design of the deal and its impact on shareholders. Of particular interest are the impact on earnings per share (i.e., EPS dilution), the governance of the new firm, and whether this is, indeed, a merger of equals. The C case (UVA-F-1452) describes the outcome of the proxy contest. The task for the student is to evaluate the strategies of each side in communicating with shareholders and presenting arguments. The objectives of the case module are to expose students to the mechanics of proxy contests, exercise skills in valuation and strategic analysis, and critically evaluate deal terms. The A and B cases can be taught in sequential classes or in one class. The C case is typically distributed at the end, followed by a brief discussion.
mergers and acquisitions, valuation, post merger integration
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48.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Dec 01
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21 Dec 01
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564 (11,989)
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Abstract:
"He knows not his own strength that hath not met adversity." -- Ben Jonson So, boy, don't you turn back. Don't you set down on the steps 'Cause you finds it kiner hard. Don't you fall now - For I'se still goin', honey I's still climbin'; And life for me ain't been no crystal stair. -- Langston Hughes, Mother to Son A man invited Nasrudin to go hunting with him, but mounted him on a horse which was too slow. The Mulla said nothing. Soon the hunt outpaced him and was out of sight. It began to rain heavily, and there was no shelter. All the members of the hunt got soaked through. Nasrudin, however, as soon as the rain started, took off all his clothes and folded them. Then he sat down on the pile. As soon as the rain stopped, he dressed himself and went back to his host's house for lunch. Nobody could work out why he was dry. With all the speed of their horses they had not been able to reach shelter on that plain. "It was the horse you gave me," said Nasrudin. The next day he was given a fast horse and his host took the slow one. Rain fell again. The horse was so slow that the host got wetter than ever, riding at a snail's pace to his house. Nasrudin carried out the same procedure as before. When he got back to the house he was dry. "It is your fault!" shouted his host. "You made me ride this terrible horse." "Perhaps," said Nasrudin, "you did not contribute anything of your own to the problem of keeping dry?" -- Idries Shah, "Dry in the Rain," from The Pleasantries of the Incredible Mulla Nasrudin "Fear is an instructor of great sagacity, and the herald of all revolutions." -- Ralph Waldo Emerson The tough teacher is a familiar heavy in film and literature: martinet, boor, hellion, or iceman. Such characterizations are a repugnant self-image to most teachers. Perhaps for this reason the tough teacher seems to be a fading breed on campuses. It is hard to imagine one who is tough and compassionate, student-centered, learning-focused and successful as measured by conventional student ratings. But the quotations of Emerson, Jonson, Hughes, and Shah can feed our imagination in useful ways. To do so is important because how tough one should be is almost the hardest choice about teaching style that an instructor must make. Erring by too much or too little suboptimizes student learning. Then, too, one must choose how to be tough. The limitless combinations of content (how tough to be) and form (how to be tough) enrich the dilemma. Where can the instructor - particularly the novice - find guidance? One could listen to the students, especially their teaching evaluations. But student feedback is an imperfect guide for calibrating one's style. A second approach would be to follow the crowd of one's colleagues. But as examples of grade inflation suggest, following the crowd sometimes results in a race to the bottom. Third, one could imitate an exemplar with whom one studied in the past. But exemplars became that way because of how they responded to their circumstances; what you need is a response to your situation. This month's column argues that a concern for learning outcomes is the best lamp with which to find one's way through these dilemmas. It helps immensely to have a view about toughness in teaching: why and how to be tough. The column offers some reflections.
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49.
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Project Financing: an Economic Overview
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Herwig Langohr INSEAD - Finance Anne Campbell affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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560 ( 12,114) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Herwig Langohr INSEAD - Finance Anne Campbell affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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28
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This note intended as an aid in the evaluation of project-financing proposals. It defines project financing, describes its strengths and weaknesses relative to internal financing, explores how project structures distribute risks and returns, and lays a conceptual foundation for the quantitative analysis of project-financing proposals.
quantitative analysis, financing, Risk and Return
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Herwig Langohr INSEAD - Finance Anne Campbell affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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532
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This note intended as an aid in the evaluation of project-financing proposals. It defines project financing, describes its strengths and weaknesses relative to internal financing, explores how project structures distribute risks and returns, and lays a conceptual foundation for the quantitative analysis of project-financing proposals.
quantitative analysis, financing, Risk and Return
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50.
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Polaroid Corporation, 1996
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Susan J. Chaplinsky University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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544 ( 12,622) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Susan J. Chaplinsky University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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26
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This case puts the student in the shoes of the recently appointed treasurer of Polaroid Corporation, who must consider several matters concerning the firm's debt policy. An immediate concern is the company's outstanding $150 million 7.25% notes, due to mature in several months. Although investment bankers interested in doing business with Polaroid have been trying to present proposals for refunding the issue, the new treasurer believes that any refunding decision should be part of a larger review of the firm's financial policies. Accordingly, he has undertaken a review of the firm's overall debt policy, focusing primarily on the mix of debt and equity and on the maturity structure of the debt. The case asks students to consider how much flexibility Polaroid's business will require in future years and to pick a target debt ratio that provides the necessary flexibility. Students must evaluate, in addition to internal demands for funds, the role of bond ratings and investment-grade status in maintaining ongoing access to capital markets.
Equity, debt policy, financial policy, restructuring
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Susan J. Chaplinsky University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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518
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This case puts the student in the shoes of the recently appointed treasurer of Polaroid Corporation, who must consider several matters concerning the firm's debt policy. An immediate concern is the company's outstanding $150 million 7.25% notes, due to mature in several months. Although investment bankers interested in doing business with Polaroid have been trying to present proposals for refunding the issue, the new treasurer believes that any refunding decision should be part of a larger review of the firm's financial policies. Accordingly, he has undertaken a review of the firm's overall debt policy, focusing primarily on the mix of debt and equity and on the maturity structure of the debt. The case asks students to consider how much flexibility Polaroid's business will require in future years and to pick a target debt ratio that provides the necessary flexibility. Students must evaluate, in addition to internal demands for funds, the role of bond ratings and investment-grade status in maintaining ongoing access to capital markets.
Equity, debt policy, financial policy, restructuring
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51.
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Krispy Kreme Doughnuts, Inc.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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536 ( 4,203) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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47
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This case considers the sudden and very large drop in the market value of equity for Krispy Kreme Doughnuts, Inc. associated with a series of announcements in 2004. These announcements caused investors to revise their expectations about the future growth of Krispy Kreme, which had been one of the most rapidly growing American corporations in the new millennium. The task for the student is to evaluate the implications of these announcements and assess the financial health of the company. This case is intended to be introductory: it can provide a first exercise in financial statement analysis and lay the foundation for two important financial themes, the concept of financial "health" and the financial-economic definition of "value" and its determinants.
financial reporting and disclosure, financial-statement analysis, economic value added
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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489
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This case considers the sudden and very large drop in the market value of equity for Krispy Kreme Doughnuts, Inc. associated with a series of announcements in 2004. These announcements caused investors to revise their expectations about the future growth of Krispy Kreme, which had been one of the most rapidly growing American corporations in the new millennium. The task for the student is to evaluate the implications of these announcements and assess the financial health of the company. This case is intended to be introductory: it can provide a first exercise in financial statement analysis and lay the foundation for two important financial themes, the concept of financial "health" and the financial-economic definition of "value" and its determinants.
financial reporting and disclosure, financial-statement analysis, economic value added
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52.
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Chrysler Corporation: Negotiations between Daimler and Chrysler (V. 2.2)
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Melinda Davies affiliation not provided to SSRN Brian Kannry affiliation not provided to SSRN Petra Christmann Rutgers, The State University of New Jersey - Management & Global Business
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21 Oct 08
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22 Oct 08
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519 ( 13,498) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Melinda Davies affiliation not provided to SSRN Brian Kannry affiliation not provided to SSRN Petra Christmann Rutgers, The State University of New Jersey - Management & Global Business
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21 Oct 08
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22 Oct 08
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28
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This case may be taught singly or used as a merger-negotiation exercise with "Daimler-Benz A. G.: Negotiations between Daimler and Chrysler" (UVA-F-1241). Set in February 1998, the case places students in the position of negotiators for the company; their task is to value both firms, assess the potential earnings dilution of a combination, and negotiate a detailed agreement with their counterpart. The case can be used to explore such interesting negotiation issues as determination of a share-exchange ratio, treatment of major stockholders, and structuring a deal. Also, the case and exercise can be used to spark a discussion of acquisition in comparison with strategic alliance, or other less formal models of combination.
mergers and acquisitions, strategic alliance, negotiation, valuation, cross-border investment
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration Melinda Davies affiliation not provided to SSRN Brian Kannry affiliation not provided to SSRN Petra Christmann Rutgers, The State University of New Jersey - Management & Global Business
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21 Oct 08
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21 Oct 08
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491
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This case may be taught singly or used as a merger-negotiation exercise with "Daimler-Benz A. G.: Negotiations between Daimler and Chrysler" (UVA-F-1241). Set in February 1998, the case places students in the position of negotiators for the company; their task is to value both firms, assess the potential earnings dilution of a combination, and negotiate a detailed agreement with their counterpart. The case can be used to explore such interesting negotiation issues as determination of a share-exchange ratio, treatment of major stockholders, and structuring a deal. Also, the case and exercise can be used to spark a discussion of acquisition in comparison with strategic alliance, or other less formal models of combination.
mergers and acquisitions, strategic alliance, negotiation, valuation, cross-border investment
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53.
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The Financial Detective, 1996
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Mark Bonney affiliation not provided to SSRN
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Posted:
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21 Oct 08
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21 Oct 08
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516 ( 13,622) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Mark Bonney affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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14
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This case provides a foundation for student discussion of financial ratios and the insights that may be gained through their use. The case presents textual descriptions of pairs of companies in eight different industries and asks the students to match the text description with the correct financial ratios for each company. Classroom discussion of the students' attempts to match results and companies reveals the strong influence of both industry and corporate strategy on the financial results and ratios for firms. A key lesson is that good financial and ratio analysis requires learning about both an industry's and a company's strategy. The case is also a good vehicle for discussing different financial ratios and their meaning.
corporate strategy, financial analysis, financial ratios, industry analysis
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Mark Bonney affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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502
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Abstract:
This case provides a foundation for student discussion of financial ratios and the insights that may be gained through their use. The case presents textual descriptions of pairs of companies in eight different industries and asks the students to match the text description with the correct financial ratios for each company. Classroom discussion of the students' attempts to match results and companies reveals the strong influence of both industry and corporate strategy on the financial results and ratios for firms. A key lesson is that good financial and ratio analysis requires learning about both an industry's and a company's strategy. The case is also a good vehicle for discussing different financial ratios and their meaning.
corporate strategy, financial analysis, financial ratios, industry analysis
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54.
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Pan-Europa Foods S.A.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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21 Oct 08
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514 ( 13,704) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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15
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In January 1993, the senior-management committee of Pan-Europa Foods must decide which major projects to fund for that year. The board of directors has arbitrarily set a limit of ECU80 million for the projects. Various managers, however, have proposed projects totaling ECU208 million. The tasks for the student are to evaluate the completed discounted-cash-flow analyses that the case presents, together with the qualitative factors (mainly strategic considerations and company politics), and choose the projects to be approved. The main conceptual issue the case presents is capital rationing and its impact on corporate-investment behavior. Looking at many projects and the senior-management perspective, the case is a useful complement to other capital-budgeting cases that focus on single projects. An instructor worksheet file is available for use with this case and teaching note.
capital budgeting, cash flow, internal rate of return, intrapersonal behavior, resource allocation, international case, diversity case, strategic planning, international
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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499
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Abstract:
In January 1993, the senior-management committee of Pan-Europa Foods must decide which major projects to fund for that year. The board of directors has arbitrarily set a limit of ECU80 million for the projects. Various managers, however, have proposed projects totaling ECU208 million. The tasks for the student are to evaluate the completed discounted-cash-flow analyses that the case presents, together with the qualitative factors (mainly strategic considerations and company politics), and choose the projects to be approved. The main conceptual issue the case presents is capital rationing and its impact on corporate-investment behavior. Looking at many projects and the senior-management perspective, the case is a useful complement to other capital-budgeting cases that focus on single projects. An instructor worksheet file is available for use with this case and teaching note.
capital budgeting, cash flow, internal rate of return, intrapersonal behavior, resource allocation, international case, diversity case, strategic planning, international
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55.
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Empirical Chemicals Ltd. (A): The Merseyside Project
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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513 ( 13,773) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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14
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Empirical Chemicals is a worldwide competitor in its industry, but earnings are falling and investors are anxious for improved financial performance. The plant manager of an aging production facility believes the time is right for plant modernization to make up for deferred maintenance and to increase production efficiency. The task for the student is to choose the relevant cash flows and complete the capital-expenditure analysis. Student and instructor worksheet files are available for use with the case and its teaching note. See also the B case (UVA-F-1021).
capital budgeting, diverse protagonist, female, relevant costs, international case, diversity case, diversity, international
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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499
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Empirical Chemicals is a worldwide competitor in its industry, but earnings are falling and investors are anxious for improved financial performance. The plant manager of an aging production facility believes the time is right for plant modernization to make up for deferred maintenance and to increase production efficiency. The task for the student is to choose the relevant cash flows and complete the capital-expenditure analysis. Student and instructor worksheet files are available for use with the case and its teaching note. See also the B case (UVA-F-1021).
capital budgeting, diverse protagonist, female, relevant costs, international case, diversity case, diversity, international
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56.
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Structuring Corporate Financial Policy: Diagnosis of Problems and Evaluation of Strategies (V. 1.5)
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Katherine Updike affiliation not provided to SSRN Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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21 Oct 08
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21 Oct 08
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495 ( 14,482) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Katherine Updike affiliation not provided to SSRN Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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25
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This technical note presents an overview of the process by which an analyst could proceed to assess the financial policy of a firm. The note defines several dimensions of financial policy, offers three benchmarks against which to evaluate the policy, and reviews the FRICTO framework with which to assess proposals for future financial policy.
capital structure, financial policy, strategic planning
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Katherine Updike affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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470
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Abstract:
This technical note presents an overview of the process by which an analyst could proceed to assess the financial policy of a firm. The note defines several dimensions of financial policy, offers three benchmarks against which to evaluate the policy, and reviews the FRICTO framework with which to assess proposals for future financial policy.
capital structure, financial policy, strategic planning
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57.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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24 Jan 05
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24 Jan 05
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483 (14,940)
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The practice of M&A is vastly influenced by securities laws and regulations. These constraints arise in the issuance of new shares by a buyer, in the disclosure of information to prospective investors, and in the prohibitions on insider trading. While there is wide discretion within these and other settings, the consequences for violating laws and regulations can be very costly, in the form of civil and criminal penalties. Since ignorance of the law is no defense, the M&A practitioner must learn the general structure: this chapter is devoted to providing an introduction to the subject. The field is complicated; its important nuances easily exceed the scope of discussion here. Thus, you must seek expert legal advice. Key lessons from this chapter include these: - You must disclose to markets all material and relevant facts about a proposed M&A transaction between two public companies. The aim of securities laws is to inform investors, produce more efficient markets, and achieve a fair or level playing field. Often, there will be sound economic reasons for telling less, rather than more. The disclosure requirements are vague, placing the burden on the practitioner to judge wisely how much to tell. A simple diagnostic will determine whether a fact is material: would you want to know about it if you were in the investor's shoes? - You must control leakage of information about a deal and avoid insider trading. The aim of securities laws is to prevent market manipulation by insiders. - You must observe correct procedures regarding deadlines and filings with regulators. These rules of the road limit the practitioner's flexibility in some respects.
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58.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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26 Aug 01
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26 Aug 01
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482 (14,980)
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The case literature needs constant replenishment. Many of our colleagues contemplate developing new cases, but aren't quite sure how to begin. To them I offer three pieces of advice. In addition, the column summarizes suggestions from five writers and users of case studies.
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59.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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26 Aug 01
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26 Aug 01
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476 (15,214)
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What superior teachers say about their own success usually sounds banal or inscrutable, hardly the stuff from which novices can take much direction. I think there is a good reason for this, which holds important implications for your own development as a teacher. This column summarizes a provocative article and offers insights into key attributes of superior teachers.
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60.
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Fonderia Di Torino S.P.A.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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21 Oct 08
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467 ( 15,606) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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25
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The managing director of this specialty foundry must decide whether to approve a major investment to automate part of her plants production process. The case presents information sufficient to build cash flow forecasts of production costs incremental to this investment. Discounted cash flow (DCF) analysis reveals that this investment project is attractive but that the benefits hinge on important assumptions about the plants business volume, the managers ability to lay off workers over the objections of a labor union, and the hurdle rate. The objectives of the case are to (1) introduce students to the mechanics of DCF analysis of go/no-go capital investment decisions, (2) consider the principle of incremental analysis as the foundation for identifying relevant cash flows for a project, (3) explore the classic trade-offs in capital-for-labor investments, and (4) review analytical adjustments required in comparing projects of unequal lives.
corporate financial strategy, discounted cash flow, capital budgeting, international finance, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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442
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Abstract:
The managing director of this specialty foundry must decide whether to approve a major investment to automate part of her plants production process. The case presents information sufficient to build cash flow forecasts of production costs incremental to this investment. Discounted cash flow (DCF) analysis reveals that this investment project is attractive but that the benefits hinge on important assumptions about the plants business volume, the managers ability to lay off workers over the objections of a labor union, and the hurdle rate. The objectives of the case are to (1) introduce students to the mechanics of DCF analysis of go/no-go capital investment decisions, (2) consider the principle of incremental analysis as the foundation for identifying relevant cash flows for a project, (3) explore the classic trade-offs in capital-for-labor investments, and (4) review analytical adjustments required in comparing projects of unequal lives.
corporate financial strategy, discounted cash flow, capital budgeting, international finance, valuation
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61.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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03 Sep 01
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03 Sep 01
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467 (15,606)
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Abstract:
SUBJECT AREA: classroom teaching. This fellow's wise enough to play the fool, and to do that well craves a kind of wit. - William Shakespeare: Twelfth Night Act 3, Scene 1 The Bard uses jesters toward serious ends. They challenge decision makers to redefine problems, to consider new information, to abandon prejudices, and to recognize pervasive stupidity. Shakespeare shows that the wise person sometimes chooses to play the fool, to loosen up in carefully calculated ways, in order to convey deep ideas. His use of "wit" has a double meaning: humor and mindfulness. What is the role of dramatic wits in the classroom? How can an understanding of the actor's craft contribute to the success of teachers? What theatrical skills should a teacher seek to acquire? This column offers a few stage directions to the teacher.
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62.
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Eastboro Machine Tools Corporation (V. 1.1)
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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439 ( 16,996) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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13
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Abstract:
IIn mid September 2001, Jennifer Campbell, the chief financial officer of this large CAD/CAM (computer-aided design and manufacturing) equipment manufacturer must decide whether to pay out dividends to the firms shareholders, or repurchase stock. If Campbell chooses to pay out dividends, she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising and change its corporate name to reflect its new outlook. The case serves as an omnibus review of the many practical aspects of the dividend and share buyback decisions, including: (1) signaling effects, (2) clientele effects, and (3) finance and investment implications of increasing dividend payout and share repurchase decisions. This case can follow a treatment of the Miller-Modigliani dividend irrelevance theorem and serves to highlight practical considerations in setting dividend policy.
Equity, corporate strategy, dividend policy, growth strategy, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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426
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Abstract:
IIn mid September 2001, Jennifer Campbell, the chief financial officer of this large CAD/CAM (computer-aided design and manufacturing) equipment manufacturer must decide whether to pay out dividends to the firms shareholders, or repurchase stock. If Campbell chooses to pay out dividends, she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising and change its corporate name to reflect its new outlook. The case serves as an omnibus review of the many practical aspects of the dividend and share buyback decisions, including: (1) signaling effects, (2) clientele effects, and (3) finance and investment implications of increasing dividend payout and share repurchase decisions. This case can follow a treatment of the Miller-Modigliani dividend irrelevance theorem and serves to highlight practical considerations in setting dividend policy.
Equity, corporate strategy, dividend policy, growth strategy, valuation
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63.
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Ubs Global Asset Management: Capturing Alpha Through Global Equity Investing
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Craig K. Ruff affiliation not provided to SSRN
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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439 ( 16,996) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Craig K. Ruff affiliation not provided to SSRN
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21 Oct 08
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Last Revised:
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21 Oct 08
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35
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Abstract:
In October 2002, the senior investment officers of UBS AGâ¬"s Global Asset Management (GAM) division, the largest asset management firm in the world, must decide whether to issue a new quantitative investment product, one that will stand in sharp contrast to GAMâ¬"s historically fundamentalist and value-style approach. The problem raises sharp questions about the strategic evolution of the industry, its products, and in particular, its leading firms. To some in the firm, it seemed that the new â¬Squantâ¬? product was a natural extension of the strategic transformation of GAM since 1995. But others in the senior team wondered whether the market would be ready for this product. The tasks for the student are to map the industry changes, evaluate the transformation of UBS, and assess the fit of the new quant product with the firmâ¬"s strategic approach. This case was prepared to meet the following teaching objectives: 1) Assess the pace, direction, and implications of globalization of the asset management industry. Key to this assessment is the emerging research on the relative importance of countries versus sectors in explaining investment returns globally; 2) Explore a â¬Scountry/sectorâ¬? organization structure for global research; Identify its defining characteristics. Compare it with other possible structures. Determine its advantages and disadvantages as an organizing system. Identify key success drivers. And 3) Evaluate a quantitative investment product relative to other product offerings.
investment management, portfolio management, globalization
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Craig K. Ruff affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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404
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Abstract:
In October 2002, the senior investment officers of UBS AGâ¬"s Global Asset Management (GAM) division, the largest asset management firm in the world, must decide whether to issue a new quantitative investment product, one that will stand in sharp contrast to GAMâ¬"s historically fundamentalist and value-style approach. The problem raises sharp questions about the strategic evolution of the industry, its products, and in particular, its leading firms. To some in the firm, it seemed that the new â¬Squantâ¬? product was a natural extension of the strategic transformation of GAM since 1995. But others in the senior team wondered whether the market would be ready for this product. The tasks for the student are to map the industry changes, evaluate the transformation of UBS, and assess the fit of the new quant product with the firmâ¬"s strategic approach. This case was prepared to meet the following teaching objectives: 1) Assess the pace, direction, and implications of globalization of the asset management industry. Key to this assessment is the emerging research on the relative importance of countries versus sectors in explaining investment returns globally; 2) Explore a â¬Scountry/sectorâ¬? organization structure for global research; Identify its defining characteristics. Compare it with other possible structures. Determine its advantages and disadvantages as an organizing system. Identify key success drivers. And 3) Evaluate a quantitative investment product relative to other product offerings.
investment management, portfolio management, globalization
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64.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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20 Aug 01
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Last Revised:
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20 Aug 01
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438 (17,052)
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Abstract:
Sooner or later, all case teachers face this difficult situation: the instructor asks a question, and no hands go up. Then perhaps the question is restated or rephrased, but still no response. Students scrutinize their notes; there is no eye contact with the teacher. The instructor gets impatient, and perhaps calls on a specific student to answer the question. The response is too brief, lacks energy. No other students take the cue. There is total silence. The discussion has stalled. What to do in a situation like this will be dictated in part by its possible causes. This column surveys possible causes and solutions for the instructor.
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65.
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General Mills' Acquisition of Pillsbury from Diageo Plc
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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427 ( 2,986) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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34
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Abstract:
In December 2000, the shareholders of General Mills were presented with a merger prospectus and proxy statement that outlined the terms by which General Mills would acquire Pillsbury from Diageo plc. Payment was composed of shares of General Mills stock, assumption of Pillsbury debt, and an unusual contingent payment. The task for the student is to assess and value the contingent payment in an effort to judge the attractiveness of the proposal and to recommend how shareholders should vote on the proposal. The contingent payment resembles a contingent value right (CVR), which provides downside protection to the sellers in an acquisition. CVRs can be modeled as two options: (1) a long put struck at a low stock price and (2) a short call struck at a higher stock price. The combination of a CVR with the underlying stock of the buyer transforms the payment to the seller from floating stock to a fixed collar. Student analysis can decompose the contingent payment into its two basic options and value the whole instrument. The teaching objectives of this case are: (1) to exercise student skills at identifying and valuing options, (2) to illustrate how the use of contingent payments can bridge differing views about the value of a target firm, and (3) to suggest the important role of synergy expectations in the evaluation of payment terms.
corporate financial strategy, mergers and acquisitions, investment analysis, risk management, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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393
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Abstract:
In December 2000, the shareholders of General Mills were presented with a merger prospectus and proxy statement that outlined the terms by which General Mills would acquire Pillsbury from Diageo plc. Payment was composed of shares of General Mills stock, assumption of Pillsbury debt, and an unusual contingent payment. The task for the student is to assess and value the contingent payment in an effort to judge the attractiveness of the proposal and to recommend how shareholders should vote on the proposal. The contingent payment resembles a contingent value right (CVR), which provides downside protection to the sellers in an acquisition. CVRs can be modeled as two options: (1) a long put struck at a low stock price and (2) a short call struck at a higher stock price. The combination of a CVR with the underlying stock of the buyer transforms the payment to the seller from floating stock to a fixed collar. Student analysis can decompose the contingent payment into its two basic options and value the whole instrument. The teaching objectives of this case are: (1) to exercise student skills at identifying and valuing options, (2) to illustrate how the use of contingent payments can bridge differing views about the value of a target firm, and (3) to suggest the important role of synergy expectations in the evaluation of payment terms.
corporate financial strategy, mergers and acquisitions, investment analysis, risk management, valuation
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66.
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Hostile Takeovers: A Primer for the Decision Maker
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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423 ( 17,852) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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38
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Abstract:
This note introduces the student to the dynamics of the hostile takeover setting and characterizes the decision problem as a "game." In this context, it is necessary to understand other players and their modes of thought, defensive tactics, and rules (laws and court precedents) by which players compete. The survey covers these considerations and discusses the probabilistic analysis by which players can assess the possible actions of various parties. The paper was prepared to supplement case discussions on hostile takeovers.
mergers and acquisitions, hostile takeovers, investment analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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385
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Abstract:
This note introduces the student to the dynamics of the hostile takeover setting and characterizes the decision problem as a "game." In this context, it is necessary to understand other players and their modes of thought, defensive tactics, and rules (laws and court precedents) by which players compete. The survey covers these considerations and discusses the probabilistic analysis by which players can assess the possible actions of various parties. The paper was prepared to supplement case discussions on hostile takeovers.
mergers and acquisitions, hostile takeovers, investment analysis, valuation
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67.
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Rocky Mountain Advanced Genome
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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418 ( 18,131) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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5
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Abstract:
In January 1996, an investment manager of a hedge fund is considering purchasing an equity interest in a start-up biotechnology firm, Rocky Mountain Advanced Genome (RMAG). The asking price is $46 million for a 90% equity interest. Although managers of the firm are optimistic about its future performance, the investment manager is more conservative in her expectations. She asks an analyst to fashion a counterproposal for RMAG's management. The tasks for the student are to apply the concept of terminal value, interpret completed analyses and data, and derive implications of different terminal value assumptions in an effort to recommend a counterproposal. Little computation is required of the student. The main objective of the case is to survey many conceptual and practical challenges associated with estimating a firm's terminal value. Issues addressed include the concept of terminal value; the materiality of the terminal-value assumption; the varieties of terminal-value estimators and their strengths and weaknesses; taxation of terminal values; when to assume liquidation versus going-concern terminal values; choosing a forecast horizon at which to estimate a terminal value; the constant growth valuation model, its derivation, limiting assumptions of constant growth to infinity, and WACC > g; use of the Fisher Formula as a foundation for estimating growth rate to infinity; and using a variety of estimates to "triangulate" in on a terminal value.
cash flow, financing, hedging, valuation, venture capital, diverse protagonist, gender (female protagonist)
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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413
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Abstract:
In January 1996, an investment manager of a hedge fund is considering purchasing an equity interest in a start-up biotechnology firm, Rocky Mountain Advanced Genome (RMAG). The asking price is $46 million for a 90% equity interest. Although managers of the firm are optimistic about its future performance, the investment manager is more conservative in her expectations. She asks an analyst to fashion a counterproposal for RMAG's management. The tasks for the student are to apply the concept of terminal value, interpret completed analyses and data, and derive implications of different terminal value assumptions in an effort to recommend a counterproposal. Little computation is required of the student. The main objective of the case is to survey many conceptual and practical challenges associated with estimating a firm's terminal value. Issues addressed include the concept of terminal value; the materiality of the terminal-value assumption; the varieties of terminal-value estimators and their strengths and weaknesses; taxation of terminal values; when to assume liquidation versus going-concern terminal values; choosing a forecast horizon at which to estimate a terminal value; the constant growth valuation model, its derivation, limiting assumptions of constant growth to infinity, and WACC > g; use of the Fisher Formula as a foundation for estimating growth rate to infinity; and using a variety of estimates to "triangulate" in on a terminal value.
cash flow, financing, hedging, valuation, venture capital, diverse protagonist, gender (female protagonist)
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68.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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406 (18,829)
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Abstract:
In November 2000, a money manager needs to make a decision regarding an offering of convertible bonds by Corning. The analysis requires her to compare the insights available from standard descriptive ratios with those available from valuation analysis. This case is intended to be a student's first exercise in analyzing convertible bonds and assumes some familiarity with option-pricing theory and bond valuation. In addition, the case highlights the importance of going beyond the convertible-bond calculations. The volatility of Corning stock has increased in the past year, making the call option more valuable, but at the same time, Corning appears to be issuing converts at a time when both its share price and stock-market valuations are at historic highs. Thus, it is imperative that the student have a view on the sustainability of stock-market valuations and the outlook for Corning. See also the B case (UVA-F-1367).
bond valuation, option pricing
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69.
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Printicomm's Proposed Acquisition of Digitech: Negotiating Price and Form of Payment
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Scott Stiegler affiliation not provided to SSRN
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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400 ( 5,647) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Scott Stiegler affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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18
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Abstract:
This case was developed to serve as a foundation for student discussion of the use of contingent forms of payment in M&A. The protagonist in the case represents the buyer, and must design terms of contingent payment ("earnout") that will protect the buyer if the rosy future does not occur, yet reward the seller if it does. Students are given completed discounted cash flow (DCF) valuations of the target (Digitech) under both the seller's and buyer's forecasts, which reveal a wide gulf in valuation. The protagonist seeks to bridge this gulf through a combination of fixed and contingent payments to the seller. Two different earnout designs are suggested in the case. Students must simulate the value of the earnout to estimate the expected value of this provision from the standpoints of both the buyer and seller.
mergers and acquisitions, Monte Carlo simulation, negotiation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Scott Stiegler affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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191
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Abstract:
This case was developed to serve as a foundation for student discussion of the use of contingent forms of payment in M&A. The protagonist in the case represents the buyer, and must design terms of contingent payment ("earnout") that will protect the buyer if the rosy future does not occur, yet reward the seller if it does. Students are given completed discounted cash flow (DCF) valuations of the target (Digitech) under both the seller's and buyer's forecasts, which reveal a wide gulf in valuation. The protagonist seeks to bridge this gulf through a combination of fixed and contingent payments to the seller. Two different earnout designs are suggested in the case. Students must simulate the value of the earnout to estimate the expected value of this provision from the standpoints of both the buyer and seller.
mergers and acquisitions, Monte Carlo simulation, negotiation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Scott Stiegler affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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191
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Abstract:
This case was developed to serve as a foundation for student discussion of the use of contingent forms of payment in M&A. The protagonist in the case represents the buyer, and must design terms of contingent payment ("earnout") that will protect the buyer if the rosy future does not occur, yet reward the seller if it does. Students are given completed discounted cash flow (DCF) valuations of the target (Digitech) under both the seller's and buyer's forecasts, which reveal a wide gulf in valuation. The protagonist seeks to bridge this gulf through a combination of fixed and contingent payments to the seller. Two different earnout designs are suggested in the case. Students must simulate the value of the earnout to estimate the expected value of this provision from the standpoints of both the buyer and seller.
mergers and acquisitions, Monte Carlo simulation, negotiation
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70.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Fadi Micaelian affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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396 (19,384)
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Abstract:
This introductory case considers the very sudden and large drop in market value of Oracle Systems' equity associated with two announcements in 1990. These announcements caused investors to revise their expectations about the future growth of Oracle Systems, perhaps the most rapidly growing U.S. corporation in the 1980s. The tasks for the student are to evaluate both the import of the announcements and the company's financial health. The case provides a first exercise in financial-statement analysis and lays the foundation for two important financial themes: the concept of financial health and the financial-economic definition of "value" and its determinants. The case also presents an interesting profile of an aggressive CEO and suggests some potential unintended financial consequences of extreme aggressiveness.
ethical issues, financial-statement analysis, revenue recognition, valuation
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71.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Scott Stiegler affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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395 (19,455)
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1
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Abstract:
This technical note introduces students to the use of earnouts and other forms of incentive payments in the context of mergers and acquisitions. The note describes the use of incentive payments in M&A, recent deals in which earnouts were used, the trend and volume of earnout deals, the benefits and disadvantages of earnout structures. The large concept in the evaluation of earnouts is their similarity to call options. This conceptual approach provides the foundation for considering how an earnout might best be structured, and how its value might be estimated. The note concludes with a generic valuation example and refers the reader to a spreadsheet model that might serve as a template for future assessments of earnouts.
mergers and acquisitions, investment analysis
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72.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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26 Aug 01
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Last Revised:
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26 Aug 01
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384 (20,196)
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Abstract:
The deepest "aha's" spring from an encounter and then a return. Repeating the encounter fuses it into one's awareness. One of the biggest mistakes a teacher can make is to forego the return or repetition. The learning process is one of slow engagement with ideas; gradually the engagement builds to a critical mass when the student actually acquires the idea. Repetition matters because it can hasten and deepen the engagement process. If one cares about quality of learning, one should consciously design repetitive engagement into courses and daily teaching. To do this well is harder than it seems. This column summarizes some subtle issues around repetition, and offers suggestions for how to proceed.
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73.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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25 May 03
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Last Revised:
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30 May 03
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381 (20,395)
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Abstract:
A teacher stretched between teaching and research inevitably finds it tough to do both. Is pursuing research really consistent with student-centered teaching? Some critics of the academy advocate the abandonment of research for the single-minded pursuit of teaching. These critics say that research is unreadable, that it has no relevance to realistic problems, that research bores students, that alumni and recruiters don't care whether students master research, and that scholarly ideas have had no impact on practical affairs. The critics often advocate a return to basics, which means focusing most of the faculty time on teaching rather than research, on tools rather than concepts, and on practice rather than theory. It is not clear what problems these remedies are meant to solve, but if improving student wisdom and learning is their aim, the abandonment of research as a discipline in the teacher's life is the wrong way to go. This column discusses why.
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74.
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Calaveras Vineyards
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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|
Posted:
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|
21 Oct 08
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Last Revised:
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21 Oct 08
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376 ( 20,819) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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20
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Abstract:
In 1994, a senior lender at a West Coast financial institution must evaluate an opportunity to provide credit for a management buyout of a vineyard.The tasks for the student are to value the vineyard, assess its ability to service the proposed debt, critically evaluate the buyout terms, and recommend action for the lender.
banking, credit analysis, forecasting, valuation, diversity
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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356
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Abstract:
In 1994, a senior lender at a West Coast financial institution must evaluate an opportunity to provide credit for a management buyout of a vineyard.The tasks for the student are to value the vineyard, assess its ability to service the proposed debt, critically evaluate the buyout terms, and recommend action for the lender.
banking, credit analysis, forecasting, valuation, diversity
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75.
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Palamon Capital Partners/Teamsystem S.P.A.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Chad Rynbrandt affiliation not provided to SSRN Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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373 ( 4,404) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Chad Rynbrandt affiliation not provided to SSRN Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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49
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Abstract:
In February 2000, a managing partner of a U.K.-based private equity fund, Palamon Capital Partners, faced the decision of whether to invest in an Italian software company, TeamSystem, S.p.A. The rationale for this investment was a belief in the rapid future consolidation of the enterprise software industry in Italy, in combination with improvements in operating performance believed to arise from a stronger investor orientation after the transaction. The transaction entailed a leveraged recapitalization of the target that would significantly change its ownership, control and leverage. The task for the student is to evaluate the attractiveness of the investment, based on a strategic appraisal, a valuation of the target with its new capitalization, and an assessment of the proposed deal structure.
discounted cash flow, leverage, valuation, multiples, private equity
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Chad Rynbrandt affiliation not provided to SSRN Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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324
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Abstract:
In February 2000, a managing partner of a U.K.-based private equity fund, Palamon Capital Partners, faced the decision of whether to invest in an Italian software company, TeamSystem, S.p.A. The rationale for this investment was a belief in the rapid future consolidation of the enterprise software industry in Italy, in combination with improvements in operating performance believed to arise from a stronger investor orientation after the transaction. The transaction entailed a leveraged recapitalization of the target that would significantly change its ownership, control and leverage. The task for the student is to evaluate the attractiveness of the investment, based on a strategic appraisal, a valuation of the target with its new capitalization, and an assessment of the proposed deal structure.
discounted cash flow, leverage, valuation, multiples, private equity
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76.
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The Hilton-Itt Wars
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sanjay Vakharia Startec Global Communications Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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361 ( 4,156) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sanjay Vakharia Startec Global Communications Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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21 Oct 08
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27
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Abstract:
This case provides a vehicle for discussing analytical approaches to understanding bidding strategies in a hostile tender offer setting. In 1997, Hilton Hotels Corporation offered to acquire ITT Corporation in an unsolicited tender offer. ITT resisted in several ways. At the date of the case (July 17, 1997), ITT announces a restructuring of the firm aimed at delivering about $70 a share to its shareholders. The task for the student is to understand why Hilton's takeover attempt has failed thus far, and what the possible responses might be at this stage. The case contains a completed valuation analysis of ITT (prepared by the casewriter), which suggests that ITT is worth, at most, $89 a share to Hilton. In preparing a possibly higher bid for the firm, the student must weigh the probability of another bidder's entering the fray and that competitor's bid price. The instructor can use this setting to compare the target shareholders' outlook with the classic "prisoner's dilemma" and to discuss the expected value of not tendering--both concepts are important in devising a bidding response.
decision analysis, mergers and acquisitions, probability analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sanjay Vakharia Startec Global Communications Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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334
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Abstract:
This case provides a vehicle for discussing analytical approaches to understanding bidding strategies in a hostile tender offer setting. In 1997, Hilton Hotels Corporation offered to acquire ITT Corporation in an unsolicited tender offer. ITT resisted in several ways. At the date of the case (July 17, 1997), ITT announces a restructuring of the firm aimed at delivering about $70 a share to its shareholders. The task for the student is to understand why Hilton's takeover attempt has failed thus far, and what the possible responses might be at this stage. The case contains a completed valuation analysis of ITT (prepared by the casewriter), which suggests that ITT is worth, at most, $89 a share to Hilton. In preparing a possibly higher bid for the firm, the student must weigh the probability of another bidder's entering the fray and that competitor's bid price. The instructor can use this setting to compare the target shareholders' outlook with the classic "prisoner's dilemma" and to discuss the expected value of not tendering--both concepts are important in devising a bidding response.
decision analysis, mergers and acquisitions, probability analysis, valuation
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77.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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26 Aug 01
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Last Revised:
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26 Aug 01
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358 (22,061)
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Abstract:
Mastery of the case discussion craft is obtained through study, reflection and practice. It is that time of year when most instructors are in the study-and-reflection mode. Therefore, I want to offer a strong recommendation of the ONE book to read (if you're reading only one) this summer on the craft of teaching. I'm occasionally asked for recommendations of this sort, and I routinely demur: one size rarely fits all. And there are several good books to choose from; I hate to show favorites. But this time I will depart from past practice in the interests of the faithful reader, who may have a brief window of opportunity this season to think about the discussion craft.
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78.
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Warren E. Buffett, 1995
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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357 ( 735) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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47
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Abstract:
Set in August 1995, this case enables students to assess Berkshire Hathaway's bid for the 49.6% of GEICO Corporation that it does not already own. Students perform a simple valuation of GEICO shares, and consider the reasonableness of the 26% acquisition premium. There are no obvious synergies, and Berkshire Hathaway has announced that it will run GEICO with no changes. Student analysis can include the investment philosophy and remarkable record of Berkshire's CEO, Warren E. Buffett. The case was prepared for use as an introduction to a finance course or a module on capital markets. The analytical tasks are straightforward, and are intended to provide a springboard for a discussion of the main tenets of modern finance. Thus, the case can be used to (1) set some of the important themes at the beginning of a finance course, including risk and return, economic reality (i.e., not accounting reality), the time value of money, and the benefits of alignment of agents and owners; (2) link concepts of valuation and corporate finance to the behavior of investors in the capital market; (3) through the use of an exemplar (Buffett), hint at the nature of best practice in management and investment (one can return to the image of Buffett repeatedly during a finance course to ask students what he would likely do in a situation); (4) build the notion of stock prices equaling the present value of future equity cash flows; and (5) exercise simple equity valuation skills using DCF analysis.
cash flow, efficient markets, investment analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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310
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Abstract:
Set in August 1995, this case enables students to assess Berkshire Hathaway's bid for the 49.6% of GEICO Corporation that it does not already own. Students perform a simple valuation of GEICO shares, and consider the reasonableness of the 26% acquisition premium. There are no obvious synergies, and Berkshire Hathaway has announced that it will run GEICO with no changes. Student analysis can include the investment philosophy and remarkable record of Berkshire's CEO, Warren E. Buffett. The case was prepared for use as an introduction to a finance course or a module on capital markets. The analytical tasks are straightforward, and are intended to provide a springboard for a discussion of the main tenets of modern finance. Thus, the case can be used to (1) set some of the important themes at the beginning of a finance course, including risk and return, economic reality (i.e., not accounting reality), the time value of money, and the benefits of alignment of agents and owners; (2) link concepts of valuation and corporate finance to the behavior of investors in the capital market; (3) through the use of an exemplar (Buffett), hint at the nature of best practice in management and investment (one can return to the image of Buffett repeatedly during a finance course to ask students what he would likely do in a situation); (4) build the notion of stock prices equaling the present value of future equity cash flows; and (5) exercise simple equity valuation skills using DCF analysis.
cash flow, efficient markets, investment analysis, valuation
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79.
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Glaxo Italia S.P.A.: The Zinnat Marketing Decision
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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357 ( 22,135) |
1
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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28
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Abstract:
In September 1990, the financial controller of this Italian subsidiary of a large pharmaceutical company must analyze the implications of two different strategies for introducing a new product into the Italian market: co-marketing distribution, in which Glaxo would permit another company to market the same product but under a different brand name; and direct sales, under which Glaxo's own sales force would be the sole channel of distribution. The tasks for the student are to scrutinize and correct financial forecasts contained in the case and then value the alternative cash flow streams. The purpose of the case is to exercise students' forecasting and valuation skills and to illustrate the application of discounted cash flow analysis to the choice of marketing policies.
cash flow, forecasting, marketing strategy, international case, diversity case, sensitivity analysis, valuation, international
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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329
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1
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Abstract:
In September 1990, the financial controller of this Italian subsidiary of a large pharmaceutical company must analyze the implications of two different strategies for introducing a new product into the Italian market: co-marketing distribution, in which Glaxo would permit another company to market the same product but under a different brand name; and direct sales, under which Glaxo's own sales force would be the sole channel of distribution. The tasks for the student are to scrutinize and correct financial forecasts contained in the case and then value the alternative cash flow streams. The purpose of the case is to exercise students' forecasting and valuation skills and to illustrate the application of discounted cash flow analysis to the choice of marketing policies.
cash flow, forecasting, marketing strategy, international case, diversity case, sensitivity analysis, valuation, international
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80.
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Susan J. Chaplinsky University of Virginia - Darden Graduate School of Business Administration Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Latha Ramchand University of Houston - Department of Finance
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| Posted: |
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08 Dec 00
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Last Revised:
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08 Dec 00
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357 (22,135)
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1
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Abstract:
We examine initial public offerings (IPOs) by foreign firms in the U.S. market between 1990 and 1997, and compare their direct and indirect issue costs to IPOs by U.S. firms. Our results indicate that foreign IPOs involve approximately the same costs on average as domestic IPOs, for all except those experiencing strong demand and upward revisions in the offer price over the course of the road show. For upwardly revised IPOs, foreign IPOs have significantly lower underpricing compared to domestic IPOs. For these offers, we find that lower underpricing is associated with less risk due to the generally greater quality of foreign issuers. It is also the case that these offers are sold more frequently in multiple markets. In addition, we observe lower underpricing for IPOs from emerging markets, which is consistent with demand being driven to some extent by diversification. Overall, we uncover no evidence to suggest that foreign IPOs experience greater capital raising costs than domestic IPOs.
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81.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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349 (22,749)
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Abstract:
In June 2004 Purinex, Inc., a pharmaceutical company with several clinically and commercially promising drugs in development, expected to secure a partnership with a major pharmaceutical company sometime in the next four to 12 months. That partnership, if secured, would enable Purinex to develop one of its leading compounds as a drug. The company, however, had no sales or earnings and only 11 months of cash on hand. The student must assess whether the company should attempt to secure financing now or wait until it consummated a partnership deal. The tasks for the student include evaluating the probabilities that a collaboration with a pharmaceutical company would actually happen; determining whether the company stay above water until such occurred; and analyzing the other risks to the company under these circumstances.
financing, capital budgeting, investment analysis, venture capital
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82.
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Primus Automation Division, 2002
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert Hengelbrok affiliation not provided to SSRN Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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346 ( 23,001) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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23
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Abstract:
In early 2002, an analyst, Tom Baumann, must propose terms for leasing one of his company's advanced factory-automation systems to a major customer. From the lessor's standpoint, the challenge is simply to design an annuity stream that yields a present value equal to, or greater than, the value of the asset being leased. Certain factors, however, serve to complicate the analysis. The tax exposure and debt rating of the customer are uncertain, leaving the analyst to estimate the impact of alternative lease terms under different tax and interest-rate assumptions. Also, the customer is considering leasing competing systems from companies in Germany and Japan; these competing proposals limit Primus's flexibility in tailoring its proposal. In short, the students task is to design lease terms that exploit the lessee's tax and interest-rate exposure within constraints set by competitive terms.
leasing
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert Hengelbrok affiliation not provided to SSRN Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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323
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Abstract:
In early 2002, an analyst, Tom Baumann, must propose terms for leasing one of his company's advanced factory-automation systems to a major customer. From the lessor's standpoint, the challenge is simply to design an annuity stream that yields a present value equal to, or greater than, the value of the asset being leased. Certain factors, however, serve to complicate the analysis. The tax exposure and debt rating of the customer are uncertain, leaving the analyst to estimate the impact of alternative lease terms under different tax and interest-rate assumptions. Also, the customer is considering leasing competing systems from companies in Germany and Japan; these competing proposals limit Primus's flexibility in tailoring its proposal. In short, the students task is to design lease terms that exploit the lessee's tax and interest-rate exposure within constraints set by competitive terms.
leasing
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83.
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Genzyme/Geltex Pharmaceuticals Joint Venture
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Samuel E. Bodily University of Virginia - Darden Graduate School of Business Administration Pierre Jacquet Arthur D. Little Inc.
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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344 ( 23,348) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Samuel E. Bodily University of Virginia - Darden Graduate School of Business Administration Pierre Jacquet Arthur D. Little Inc.
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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31
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Abstract:
In March 1997, an executive vice president of Genzyme Corporation must develop the terms by which the $518 billion (revenue) firm will form a joint venture with a small biotechnology firm to make and market a new drug. The tasks for the decision-maker are to estimate the enterprise value of the new joint venture and to recommend how large an interest to acquire in the venture, and to determine what price to pay for that interest, and when. The case may be used to pursue some or all of the following objectives: (1) exercising analytical techniques, (2) introducing a framework for creating value and reducing risk, (3) exploring the impact on value of a hidden option (staged investing), and (4) visualizing risk and its implications.
joint ventures, Monte Carlo simulation, research and development, risk analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Samuel E. Bodily University of Virginia - Darden Graduate School of Business Administration Pierre Jacquet Arthur D. Little Inc.
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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313
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Abstract:
In March 1997, an executive vice president of Genzyme Corporation must develop the terms by which the $518 billion (revenue) firm will form a joint venture with a small biotechnology firm to make and market a new drug. The tasks for the decision-maker are to estimate the enterprise value of the new joint venture and to recommend how large an interest to acquire in the venture, and to determine what price to pay for that interest, and when. The case may be used to pursue some or all of the following objectives: (1) exercising analytical techniques, (2) introducing a framework for creating value and reducing risk, (3) exploring the impact on value of a hidden option (staged investing), and (4) visualizing risk and its implications.
joint ventures, Monte Carlo simulation, research and development, risk analysis, valuation
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84.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Anna D. Buchanan University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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321 (25,306)
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Abstract:
In 2002, a money manager is considering how to vote her shares in Hewlett-Packard on the proposal to merge with Compaq. The A case (UVA-F-1450) presents information about the strategic and financial motivations of the merger. Included are completed valuations of both HP and Compaq and detailed summaries of the leading advocate (Carly Fiorina) and critic (Walter Hewlett). The tasks for the student are to value the prospective synergies in the deal and critically assess the strategic arguments (pro and con). The B case (UVA-F-1451) affords a detailed examination of the terms of the proposed merger. The tasks for the student are to critically assess the specific design of the deal and its impact on shareholders. Of particular interest are the impact on earnings per share (i.e., EPS dilution), the governance of the new firm, and whether this is, indeed, a merger of equals. The C case describes the outcome of the proxy contest. The task for the student is to evaluate the strategies of each side in communicating with shareholders and presenting arguments. The objectives of the case module are to expose students to the mechanics of proxy contests, exercise skills in valuation and strategic analysis, and critically evaluate deal terms. The A and B cases can be taught in sequential classes or in one class. The C case is typically distributed at the end, followed by a brief discussion.
mergers and acquisitions, valuation, post merger integration
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85.
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Practices of Active Private Equity Firms in Latin America
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Susan J. Chaplinsky University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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319 ( 25,400) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Susan J. Chaplinsky University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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30
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Abstract:
The purpose of this note is to offer a general profile of private equity investment firms and practices in Latin America as of early 2001. The findings are developed from field interviews conducted by the authors with 20 local and regional funds during December 2000 and January 2001 in the four most prominent countries of the region: Argentina, Brazil, Chile, and Mexico. The sample of sponsors was selected based on their strategy, number of investments, capital under management, and background, and was intended to be as diverse as possible to cover a broad range of practices rather than to focus on a homogeneous subset.
financial institutions, international finance, investment analysis, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Susan J. Chaplinsky University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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289
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Abstract:
The purpose of this note is to offer a general profile of private equity investment firms and practices in Latin America as of early 2001. The findings are developed from field interviews conducted by the authors with 20 local and regional funds during December 2000 and January 2001 in the four most prominent countries of the region: Argentina, Brazil, Chile, and Mexico. The sample of sponsors was selected based on their strategy, number of investments, capital under management, and background, and was intended to be as diverse as possible to cover a broad range of practices rather than to focus on a homogeneous subset.
financial institutions, international finance, investment analysis, valuation
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86.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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315 (25,752)
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Abstract:
In December 1997, the CEOs of Union Bank of Switzerland and Swiss Bank Corporation were evaluating the proposed terms of merger of their two firms. This transaction promised to change the competitive landscape among commercial banks, investment banks, and asset managers, not only in Europe, but also globally. The A case relates the strategic pressures toward consolidation in the global financial-services industry, the histories of the two firms, the prospective economic benefits of merger, and the terms of merger. The tasks for the students include the following: 1. Strategic assessment. Students must evaluate the forces of change in the industry and why a combination of these two firms might dominate strategic alternatives. 2. Economic and valuation analysis. Students must appraise the economic consequences of the proposed deal from the standpoint of shareholders of the two firms. At the heart of this analysis is a careful valuation of proposed synergies. The size and sources of the synergy values are particularly instructive. 3. Deal-structure analysis. Students must summarize the terms of the combination from the standpoints of appropriateness and fairness. In particular, this deal was structured as a merger of equals, with a low acquisition premium, sharing of power, and blending of the two sides. Whether such a structure was more appropriate than an outright acquisition is an important point of instruction in the case. 4. Communication strategy. Finally, students should address the challenges of how to present the deal to the various constituencies of the two firms: shareholders, regulators, customers, and employees. The B case (UVA-F-1422) describes the communication strategy and planning for postmerger integration. The C case (UVA-F-1423) summarizes the integration effort and the economic results over the five years following the transaction. It is recommended that the instructor distribute the A case for advance preparation by students and hold the B and C cases for discussion after the A case. This series of cases about the UBS-SBC merger was prepared to serve a number of learning objectives: 1. Exercise skills of valuation and strategic analysis. The cases assume that students have been exposed to standard concepts in these areas and are ready to apply them. 2. Survey the often arduous process by which M&A deals are developed and then implemented. These cases give detailed insight into the risks and difficulties of transaction management. 3. Explore the terms of merger and the wide range of choices in transaction design. A key lesson here is that a deal consists of much more than price. Students will see that issues regarding form of payment, governance, and social terms are vital aspects of a deal. 4. Consider the enormous challenges of postmerger integration. The cases report the integration strategies adopted in various lines of business and thereby afford the opportunity for comparing the motives and effects of different integration strategies.
mergers and acquisitions, banking, finance, introduction, investment banking, strategic planning, valuation
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87.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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26 Oct 04
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Last Revised:
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26 Oct 04
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312 (26,069)
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Abstract:
A perfect storm has descended on business schools, challenging them to justify their existence more than at any time I can remember in the last 30 years. The challenge takes many forms, but a common thread is disillusionment with the mission of business learning. My response: Get a grip. We need business learning now more than ever. This column discusses why.
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88.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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26 Aug 01
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Last Revised:
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26 Aug 01
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311 (26,184)
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Abstract:
Of all the steps you might take to teach or learn the craft of discussion leadership, mentoring is the most difficult. But done well, I believe it is the most effective. Here at the mid-year lull when many teachers have an opportunity to think beyond the next semester, I offer a pitch in favor of embarking individually and severally upon this important long-term process, and suggestions for how to proceed.
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89.
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Deutsche Bank Securities: Financing the Acquisition of Consolidated Supply S.A.
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Export Bibliographic Info |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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307 ( 5,800) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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24
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Abstract:
In November 2003, a vice president of Deutsche Bank Securities received a request from a client to finance the acquisition of a large hospital-supply distributor. The client needed to present to the seller an offering price and indication of financial commitment within two weeks. The contemplated transaction entailed a highly leveraged acquisition of the target. The tasks for the student are to value the target firm and projected synergies, assess the creditworthiness of the target (i.e., the ability to bear the high debt), and critically evaluate the general design of the transaction.
valuation, deal design
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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283
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Abstract:
In November 2003, a vice president of Deutsche Bank Securities received a request from a client to finance the acquisition of a large hospital-supply distributor. The client needed to present to the seller an offering price and indication of financial commitment within two weeks. The contemplated transaction entailed a highly leveraged acquisition of the target. The tasks for the student are to value the target firm and projected synergies, assess the creditworthiness of the target (i.e., the ability to bear the high debt), and critically evaluate the general design of the transaction.
valuation, deal design
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90.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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27 Oct 00
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27 Oct 00
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306 (26,693)
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SUBJECT AREA: classroom teaching. Being digital (or at least heading there) is perhaps the most interesting forward-looking issue in the development of excellent teachers today. Society is awash in progressively higher tides of new information technology. For teachers, this creates a race to adapt, cheered by students who value flexibility and novelty, and by corporate partners who want their new recruits trained in the latest and greatest. However fleet of foot the instructor might be, the workout required to keep up with the pack is nontrivial. There is always new software or systems lying around the bend. The price tag for it all requires smelling salts for Deans. And though the invention and experimentation brings tangible rewards to the teaching enterprise, it also carries unintended adverse side effects. The finish line to this race keeps moving outward. And besides, as Gertrude Stein might have asked, is there a there there? I think the answer is "yes" though its shape is not obvious today. And getting there successfully depends crucially on the distinction between wisdom, knowledge, and information. This note offers some suggestions to guide the journey. Past columns by Robert Bruner may be found by search at the SSRN website at: http://papers.ssrn.com/sol3/search.taf or by going to his Author Page at SSRN at: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=66030
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91.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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302 (27,113)
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This case is set in the midst of the attempted takeover of Walt Disney Productions by the raider Saul Steinberg in June 1984. Disney's chief executive officer ponders whether to fight the takeover or pay "greenmail." One significant influence on the decision is the "true" value of the firm. The case offers, either directly or through analysis, several estimates of value. The valuation question invites a review of Disney's past performance and current competitive position. Other significant influences on the decision are the ethics and economics of paying greenmail. The rich range of issues raised in the case (strategy, valuation, performance measurement, and ethics) makes it an effective first case, review case, or final exam in a corporate-finance course. A student worksheet file is available for use with this case.
competitive analysis, ethical issues, mergers, performance evaluation, takeover defense, valuation
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92.
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Rhone-Poulenc Rorer, Inc.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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21 Oct 08
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294 ( 27,983) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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11
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This case considers the unusual terms under which Rhone-Poulenc, the large French chemicals producer, acquired the U.S.-based Rorer Group, Inc., in August 1990. Set a year later, in August 1991, the case reviews the terms of the merger and the experience of the new entity in its first year, and invites the student to evaluate the "contingent value right" (CVR) issued by Rhone-Poulenc in the merger.
corporate financial strategy, acquisitions, bargaining/bidding, forecasting, hedging, joint ventures, option pricing, diversity case, international
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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283
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Abstract:
This case considers the unusual terms under which Rhone-Poulenc, the large French chemicals producer, acquired the U.S.-based Rorer Group, Inc., in August 1990. Set a year later, in August 1991, the case reviews the terms of the merger and the experience of the new entity in its first year, and invites the student to evaluate the "contingent value right" (CVR) issued by Rhone-Poulenc in the merger.
corporate financial strategy, acquisitions, bargaining/bidding, forecasting, hedging, joint ventures, option pricing, diversity case, international
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93.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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291 (28,301)
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Abstract:
In February 1991, the managers of this multinational specialty publishing company proposed to take the company private in a leveraged buyout (LBO). In addition to the ordinarily interesting features of the typical LBO, this transaction was the first to be denominated in ECUs and one of the few in which the managers provided all the equity financing. The tasks for the student are to value the company and evaluate the attractiveness of the transaction from the standpoints of seller, senior lender, mezzanine lender, and equity investor/manager. The case can be used to (1) exercise students' skills in valuing a highly leveraged company, (2) illustrate how deal structuring can mitigate potential agency problems, and (3) explore the problems and possible solutions associated with financing a global firm.
acquisitions, debt policy, incentives, international business, leveraged buyouts, multinationals, international case, diversity case, valuation, international
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94.
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Kent L. Womack Dartmouth College – Tuck School of Business Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Stephen R. Foerster University of Western Ontario - Richard Ivey School of Business Robert C. Higgins University of Washington - Department of Finance and Business Economics
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11 Oct 01
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24 Aug 04
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289 (28,496)
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Abstract:
The events of September 11 provided an extraordinary teaching experience for schools and educators. Schools cancelled classes, organized prayer services, made grief counselors available, heightened security, organized ways for members of the community to help, assisted alumni to establish roll-calls to check for the missing, and encouraged tolerance. For those of us in the classroom, the response was somewhat more intimate. Many students looked to faculty in new ways - not simply as experts who helped them learn Finance, but also as sources of direction in troubled times. We asked the members of the Advisory Board about their teaching experiences in this time and how they and their schools reacted to the events. We are grateful to those educators who choose to share their reflections with us and we hope you find them interesting. If you would like to share your thoughts, please send them in an email to Roundtable@SSRN.Com, let us know whether you want to be identified by name. We will post the follow up as an addendum to this feature.
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95.
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Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Dorothy A. Kelly affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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288 (28,617)
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In June 2001, the owners of this small rapidly growing sports promotion firm are assessing the financing implications of their growth plans. Threshold Sports organizes professional cycling races, and holds major race franchises for several large U.S. cities. It seeks to expand quickly the number of events that it manages, eventually to build professional cycling in the United States to a level consistent with Europe. The growth outlook creates a financing need of $500,000. The case presents three financing alternatives: debt, common equity, and convertible preferred stock. The task for the student is to assess the alternatives and make a recommendation. The choice hinges importantly on the estimated value of the firm.
corporate financial strategy, capital structure, investment analysis, valuation
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96.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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17 Sep 07
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17 Sep 07
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285 (28,973)
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1
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This paper, which is the introductory chapter in our book, "The Panic of 1907: Lessons Learned from the Market's Perfect Storm", from John Wiley & Sons, sketches the events of the panic and outlines seven drivers of financial crises. These drivers are apparent in this specific crisis, and they have been identified in research: 1) system complexity; 2) buoyant growth; 3) inadequate slack; 4) adverse leadership; 5) cognitive biases; 6) real economic shock; and 7) failure of collective action. The downloadable document contains the table of contents and introductory chapter.
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97.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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08 Mar 05
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08 Mar 05
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285 (28,973)
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Considerable research attention in recent years has focused on the profitability of segments of the M&A market that are associated with significant returns to shareholders. This study complements that stream of literature by studying the attributes of extreme performers. It draws a sample of 2,805 transactions from 1985 to 2000 and isolates sub samples of the best and worst-performing transactions, ranked on the basis of risk-adjusted returns to the buyer's shareholders over the short and long terms. Then it compares the sub samples on dimensions reflecting four key hypotheses about the drivers of returns from merger: (a) concentration or "mania" for activity ("hot markets"); (b) strategic relatedness; (c) payment and transaction design and (d) investment opportunity. The results offer evidence that the best and worst firms differ in important ways from each other and from the general sample of transactions. The findings support the four key hypotheses, but they describe the best and worst transactions differently.
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98.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Michael Innes affiliation not provided to SSRN William Passer affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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283 (29,196)
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Abstract:
Set in September 1992, this exercise provides teams of students the opportunity to negotiate terms of a merger between McCaw Cellular and AT&T. McCaw was the largest competitor in the rapidly growing cellular-telephone-communications industry. AT&T, one of the largest U.S. corporations, was the dominant competitor in long-distance telephone communications in the United States. Prior to the negotiations, AT&T had no position in cellular communications. This case and its companion (UVA-F-1142) are designed to allow students to be assigned roles to play. The case may be used to pursue some or all of the following teaching objectives: exercising valuation skills, practicing strategic analysis, exercising bargaining skills, and illustrating practical aspects of mergers and acquisitions.
acquisitions, cash flow, entrepreneurship, mergers, valuation
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99.
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Compass Records
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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Posted:
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21 Oct 08
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21 Oct 08
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282 ( 8,221) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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21 Oct 08
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21 Oct 08
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33
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The cofounder of Compass Records, a small, independent music-recording company, must decide whether to "produce and own" the next album of an up-and-coming folk musician or simply "license" her finished recording. This case presents information sufficient to build cash-flow forecasts for either investment alternative. Discounted cash flow (DCF) analysis reveals that licensing will be the more attractive alternative unless the student assesses the value of the options for follow-on albums included in the "produce-and-own" contract.
discounted cash flow, capital investment, sensitivity analysis
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration Sean Carr University of Virginia - Darden Schoool of Business
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| Posted: |
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21 Oct 08
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21 Oct 08
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249
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Abstract:
The cofounder of Compass Records, a small, independent music-recording company, must decide whether to "produce and own" the next album of an up-and-coming folk musician or simply "license" her finished recording. This case presents information sufficient to build cash-flow forecasts for either investment alternative. Discounted cash flow (DCF) analysis reveals that licensing will be the more attractive alternative unless the student assesses the value of the options for follow-on albums included in the "produce-and-own" contract.
discounted cash flow, capital investment, sensitivity analysis
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100.
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Empirical Chemicals Ltd. (B): Merseyside and Rotterdam Projects
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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282 ( 29,301) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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5
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Abstract:
The B case extends the analysis in the A case (UVA-F-1020) to the next level, where the executive must choose between two mutually exclusive plant-renovation projects. Net present value (NPV) and internal rate of return rank the projects differently, affording an opportunity to (IRR) discuss the classic "cross-over" problem in capital investment analysis. Operational flexibility is a significant factor, permitting a discussion of the role of real options in investment analysis. The last element is politics as managers jockey for project approval. A student worksheet file is available for use with this case.
capital budgeting, capital investment, cash flow, diverse protagonist, female, resource allocation, international case, diversity case, valuation, diversity, international
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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277
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Abstract:
The B case extends the analysis in the A case (UVA-F-1020) to the next level, where the executive must choose between two mutually exclusive plant-renovation projects. Net present value (NPV) and internal rate of return rank the projects differently, affording an opportunity to (IRR) discuss the classic "cross-over" problem in capital investment analysis. Operational flexibility is a significant factor, permitting a discussion of the role of real options in investment analysis. The last element is politics as managers jockey for project approval. A student worksheet file is available for use with this case.
capital budgeting, capital investment, cash flow, diverse protagonist, female, resource allocation, international case, diversity case, valuation, diversity, international
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101.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Mark Kritzman Windham Capital Management Wei Li University of Virginia - Darden Graduate School of Business Administration Elizabeth F. O'Halloran University of Virginia - Darden Schoool of Business
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| Posted: |
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27 Nov 02
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23 Nov 02
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281 (29,434)
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Abstract:
SUBJECT AREAS: valuation, investment analysis, portfolio management, country analysis, emerging markets, development economics. This CD-ROM contains an edited interview with Mark Mobius, one of the best-known asset managers specializing in emerging markets equities. His early advocacy of emerging markets was instrumental in building investor awareness of this asset class. His books and speeches on emerging markets investing solidified his prominence as a leading spokesman for them. The CD-ROM was created to serve educational purposes, such as classroom presentation, for student preparation and discussion, and to support self-learning and distance-learning goals of individuals. Objectives of the CD-ROM are to: - Explore the role of emerging markets equities within the entire spectrum of investment classes. - Consider the investing philosophy and approach of one of the leading emerging markets investors, Mark Mobius. - Review the classic challenges facing investors in emerging markets and the possible remedies to those challenges.
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102.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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277 (30,068)
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Abstract:
A new director of this small German beer brewery must prepare to vote on three issues coming before the board of directors the next day: (1) approval of the financial plan for 2001, (2) declaration of the quarterly dividend, and (3) adoption of an incentive-compensation plan for the marketing manager. The task for the student is to evaluate the past and prospective financial performance of the company and to critique its liberal credit and inventory policies. The objectives of the case are to (1) introduce and exercise tools and concepts of financial-statement analysis (including financial ratios, break-even analysis, and cash-flow statements); (2) explore possible definitions of the â¬Sfinancial healthâ¬? of a company; (3) illustrate the linkage between operating policies and financial performance; (4) consider the interdependence among corporate objectives regarding growth, dividends, and debt financing; (5) explore the linkage between compensation incentives and financial performance (in this case, the marketing manager is motivated to build sales volume, which he accomplishes with a dramatic build-up in receivables and inventory); and (6) illustrate some of the challenges of doing business in an emerging market.
Financial assessment
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103.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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27 Aug 01
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Last Revised:
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27 Aug 01
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270 (30,849)
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Abstract:
Mark Twain barely contained his use of profanity, a problem his wife abhorred and sought to cure. One evening, he and she were dressing for a formal dinner when a button popped off his shirt. He launched a tirade against buttons, formal shirts, and evening wear. After a few minutes, the profanity subsided. Twain's wife decided to use the moment to remind her husband to govern his language. Calmly, and in a flat voice, she repeated, word for word, the entire tirade. Twain replied, "My dear, you have the words, but you don't have the tune." Much the same could be said of the way scholars describe their teaching. The typical curriculum vitae emphasizes written work over teaching. Promotion portfolios usually consist of a solid discussion of the candidate's intellectual contribution as a researcher, combined with a simple list of courses taught and perhaps some teaching ratings. The presentation has some words about teaching, but none of the music: choices made in course design; risks taken; successes (or learnings from failures); teaching philosophy and style; interpretation of the teaching ratings; growth as a teacher and plans for continued professional development. Absent these, the presentation of one's teaching is like the language of Twain's wife, flat and tuneless. This column summarizes the concept of the teaching portfolio as a way to present the teaching side of one's professional work.
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104.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Samuel E. Bodily University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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268 (31,089)
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Abstract:
This case describes new options on weather derivatives from Enron, in particular, floors, swaps, and caps on heating-degree days. An electric utility is considering whether to purchase a weather derivative to offset the risk of low volume of kilowatt-hours. After understanding the nature and purpose of the contract, students will structure the option in preparation for valuing it. See also the A case (UVA-F-1299).
hedging, option pricing, risk analysis, risk management, simulation
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105.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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26 Aug 01
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Last Revised:
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26 Aug 01
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263 (31,764)
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Abstract:
In a great discussion-based class one experiences a convergence of energy and thought among the students. An idea or comment nags several students, won't let go, and generates energy. The discussion assumes a life of its own, almost apart from direction of the teacher. Students exercise leadership for expressing and testing ideas; they replicate the exploratory process in class. In an intangible instant, one perspective seems to sweep the class; the light goes on; the class "clicks." This is one of the most gratifying moments in teaching, and is something that many teachers consciously strive for. Would that it happened every time; but it does not. Some class discussions run flat, despite one's best efforts. Others spin out of control or dive into an abyss of false thinking. In both the good and the bad instances is the element of surprising spread of an idea, attitude, or energy. What can the instructor do to encourage the good outcomes, and thwart the bad? This column offers some suggestions.
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106.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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261 (32,026)
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Abstract:
Set in May 2000, these cases reflect the separate perspectives of the CEOs as they approach the negotiations of TSE International to acquire Yeats Valves. The task for the student is to complete a valuation analysis of the target and buyer, and to negotiate a price and exchange ratio wit the counterparty. Each case contains a financial forecast only for that side; therefore an important element in the negotiation is to obtain the private information of the other side, analyze it, and successfully negotiate terms of acquisition. The cases are relatively simple, and are offered as a first exercise in the valuation of the firm and negotiation of an acquisition. The case may be used to pursue some or all of the following teaching objectives:
cost of capital, international
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107.
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Battle for Value: Federal Express Corporation Vs. United Parcel Service of America, Inc. (Abridged)
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Derick Bulkley University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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256 ( 32,737) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Derick Bulkley University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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18
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Abstract:
This case is an abridged version of UVA-F-1115. This version is intended for use with audiences requiring less source documentation than is available in the unabridged version. The teaching note, however, contains all the source documentation in an appendix.
corporate strategy, financial analysis, industry analysis
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Derick Bulkley University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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238
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Abstract:
This case is an abridged version of UVA-F-1115. This version is intended for use with audiences requiring less source documentation than is available in the unabridged version. The teaching note, however, contains all the source documentation in an appendix.
corporate strategy, financial analysis, industry analysis
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108.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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26 Aug 01
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Last Revised:
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26 Aug 01
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255 (32,872)
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Abstract:
The baseball coach, Yogi Berra, once remarked "You can observe a lot just by watching." This, it seems to me, is dubious advice to those who want to learn to teach by observing others. It implies a rather passive, disengaged approach to this important activity and is no guarantee of learning or growth as a teacher. Observation is one of the most important means by which one learns to teach by the case method. It is hard, fully engaged work. Here are some tips for making this a more fruitful use of time.
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109.
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Financial Detective
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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249 ( 33,759) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN
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21 Oct 08
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21 Oct 08
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16
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Abstract:
This case presents common-sized financials for two companies, each of which is in a number of industries. The companies have different market niches, and students are asked to identify the companies from details provided. The case also allows for financial comparisons among industries.
data analysis, financial analysis, financial ratios, industry analysis
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Casey Opitz affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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233
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Abstract:
This case presents common-sized financials for two companies, each of which is in a number of industries. The companies have different market niches, and students are asked to identify the companies from details provided. The case also allows for financial comparisons among industries.
data analysis, financial analysis, financial ratios, industry analysis
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110.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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26 Aug 01
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Last Revised:
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26 Aug 01
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249 (33,759)
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Abstract:
A packet of student evaluations of you and your course arrive on your desk at the end of the season. What, exactly, is one to do with this stuff? This little package is one of the tell-tales of larger forces at work in management education. Virtually all schools are giving more attention to the quality of teaching and course designs. The evaluations have gotten longer and more detailed over time. They carry more weight in decisions about promotion, tenure and compensation. Qualitative comments seem to carry more "bite." The pressures to please recruiters and other clients the advent of rankings of business schools, and the evaluative tendencies of "generation X" are some of the tectonic forces at work here. Many instructors view student evaluations with indifference, fear and/or anger. Criticism is rarely pleasant to receive. One can't reply. And the pressures to teach well heavily load the experience. This column offers some suggestions for how to proceed.
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111.
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William Sihler University of Virginia - Darden Graduate School of Business Administration Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Andrew Meiman affiliation not provided to SSRN Reed Menefee affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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21 Oct 08
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248 (33,919)
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Abstract:
Set in 1994, this case concerns a subsidiary of Westmoreland Coal that is considering whether to proceed alone as the international partner and developer of a coal-fired electric power plant in Zhangze, China. The domestic partner, the government's electric power agency, has proposed a build-operate-transfer (BOT) project financing in which Westmoreland Energy (WEI) would receive returns over 20 years and then exit. The internal rate of return on the project appears to exceed the CEO's target rate, though the project developer, Dorothy Hampton, is concerned about a variety of risks and the appropriateness of the target hurdle rate. The tasks for the student are to evaluate the risks, estimate a target rate of return, exercise the valuation model (which is given in the case), and recommend any changes in the deal structure that can help WEI achieve its goals. The objectives of the case are to (1) exercise students' capabilities in analyzing a complex investment-financing transaction from the standpoints of various project participants (the key tasks are risk analysis and valuation), (2) illustrate the financial effects of debt leverage and equity leverage (the focus of attention is on the creation of value and its sources, risk shifting, and wealth transfers), and (3) assess the characteristics and challenges of project financings and development projects in emerging economies.
international investment, emerging economies, electric power generation, political risk analysis, deal structuring, corporate investment analysis, project financing, valuation, international
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112.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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27 Oct 99
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26 Aug 01
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248 (33,919)
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Abstract:
"It often happens that two schoolboys can solve difficulties in their work for one another better than the master can. When you took the problem to a master, as we all remember, he was very likely to explain what you understood already, to add a great deal of information which you didn't want, and say nothing at all about the thing that was puzzling you. . . . The fellow-pupil can help more than the master because he knows less." As C.S. Lewis tells us in this quotation, teachers can try too hard: they can focus on teaching rather than learning, on control rather than guidance, on the material rather than the student. Lewis argues, in effect, that too much Teacher can crowd out other important avenues of learning. Finding the Goldilocks mixture of neither too much nor too little Teacher Presence is one of the subtle challenges confronting the instructor and program designer. Here is where using peer-based teaching tactics can help immensely.
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113.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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246 (34,250)
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Abstract:
This aggressive retailer is adding store space at the annual rate of 25%. This case presents an external-financing requirement amounting to $1.4 billion over the next five years. Students must decide how to meet this requirement wisely, acknowledging the relationship between business strategy and financial policy. Analysis of the firm's share price reveals a substantial overvaluation in the market. A student worksheet file is available for use with this case.
financial policy, growth management, security analysis, strategy formulation, strategy implementation, valuation
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114.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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245 (34,394)
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Abstract:
In the late 1990s, the National Railroad Passenger Corporation (Amtrak) faced a rude awakening as Congress stipulated that it eliminate its reliance on federal subsidies by 2002. In response, Amtrak drew up a plan for self-sufficiency, the centerpiece of which was a new high-speed passenger service that, it was hoped, would boost revenue enough to make Amtrak self-sufficient by 2002. To run this new service, Amtrak needed to purchase $750 million worth of new locomotives and train sets in 1999. Three alternatives were available for funding the purchase: debt financing, lease financing, or reliance on federal sources. The case opens with Amtraks CFO instructing her staff in April 1999 to review a leveraged-lease proposal that has just been submitted by BNY Capital Funding LLC. The objectives of the case are to introduce students to financial leases as a financing alternative, explore the lease-versus-buy decision and the conditions under which financial lease arrangements make sense, and exercise skills in the valuation of financial leases.
debt policy, leasing, valuation
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115.
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Renault-Volvo Strategic Alliance (a): March 1993
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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21 Oct 08
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241 ( 35,008) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration
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21 Oct 08
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21 Oct 08
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8
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Set in 1993, this series of cases (A,B,C,D, and B [abridged]) concerns the strategic alliance between the automotive businesses of AB Volvo, the largest industrial group in Scandinavia, and Renault S.A., the largest enterprise in France. This alliance was one of the most prominent failures of multinational business integration seen in recent years. The aim of this series is to explore three broad themes: strategic alliances, leadership of corporate transformation, and governance and investor relations. The A case reviews the original formation of the strategic alliance in 1990 and its status as of March 1993, when the probability of Renault's privatization increased. The tasks for the student in the A case are to assess the origins and current health of the strategic alliance and to recommend responses to the impending privatization of Renault.
corporate financial strategy, acquisitions, joint ventures, leadership, mergers
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert E. Spekman University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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233
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Abstract:
Set in 1993, this series of cases (A,B,C,D, and B [abridged]) concerns the strategic alliance between the automotive businesses of AB Volvo, the largest industrial group in Scandinavia, and Renault S.A., the largest enterprise in France. This alliance was one of the most prominent failures of multinational business integration seen in recent years. The aim of this series is to explore three broad themes: strategic alliances, leadership of corporate transformation, and governance and investor relations. The A case reviews the original formation of the strategic alliance in 1990 and its status as of March 1993, when the probability of Renault's privatization increased. The tasks for the student in the A case are to assess the origins and current health of the strategic alliance and to recommend responses to the impending privatization of Renault.
corporate financial strategy, acquisitions, joint ventures, leadership, mergers
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116.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Paul J. Simko University of Virginia - Darden Graduate School of Business Administration Mary Margaret Frank University of Virginia - Darden Graduate School of Business Administration Marc Goldstein Impact LLC
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| Posted: |
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21 Oct 08
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21 Oct 08
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237 (35,575)
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Abstract:
In September 2003, Jeffrey Immelt, CEO of General Electric, must evaluate a final proposal for GE to acquire Amersham plc, the leading producer of contrast agents used in medical diagnostics. This case permits valuation of Amersham based on peer firms, comparable transactions, and recent trading history. But the focus of analysis is on the robustness of Amersham's intellectual property (IP). On close examination, the company's IP position is weaker than it appears, given recent patents filed by competitors. The economic impact of these IP challenges may be tested in the case of the company's leading product, Visipaque, for which cash flows are given. Discounted-cash-flow analysis reveals great sensitivity to the remaining years of effective patent life. A key lesson regards the importance of due-diligence research on a firm's IP position. The teaching objectives of the case are to explore the impact of IP on corporate valuation, to consider the drivers of change in a company's IP position, and to survey some general measures of a company's IP position.
mergers and acquisitions, valuation, intellectual property
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117.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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237 (35,575)
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Abstract:
A new director of this small brewery must prepare to vote on three issues coming before the board of directors the next day: (1) approval of the financial plan for 1993, (2) quarterly dividend declaration, and (3) incentive-compensation plan for the marketing manager. The tasks for the student are to evaluate the past and prospective financial performance of the company and to assess the extremely liberal credit and inventory terms the company is extending to its distributors. The objective of the case is to introduce and exercise tools and concepts of financial-statement analysis. Perhaps the biggest insight gained by students concerns the link between incentives and financial performance: in this case, the marketing manager is motivated to build sales volume, which he accomplishes by a dramatic buildup in receivables and inventory. Student and instructor worksheet files are available for use with this case and teaching note.
break-even analysis, credit analysis, dividend policy, financial-statement analysis, inventory management, diverse protagonist, female, risk analysis, international case, diversity case, diversity
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118.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Philippe Demigne affiliation not provided to SSRN Jean-Christophe Donek affiliation not provided to SSRN Bertrand George affiliation not provided to SSRN Michael Levy affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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21 Oct 08
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229 (36,963)
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Abstract:
In April 1992, GrandMet, a multinational consumer-foods and -beverages company, is the focus of takeover rumors, which have prompted an assessment of the firm's returns. The student must choose among the principal methods of estimating the weighted average cost of capital (WACC) for GrandMet and its three main business segments, and must then produce WACC estimates in order to evaluate the firm's performance. An instructor worksheet file is available for use with this case and teaching note.
capital asset pricing model, cost of capital, dividend-growth model, divisional performance, multinationals, profitability analysis, international case, diversity case, diversity, international
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119.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Peter R. Hennessy Hennessy Lexus
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| Posted: |
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21 Oct 08
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21 Oct 08
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228 (37,137)
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Abstract:
This case asks the student to evaluate the leveraged buyout of a tuna canner from the standpoints of senior lender, mezzanine investor, and equity investor. Detailed discounted-cash-flow analysis is used. Student and instructor worksheet files are available for use with the case and teaching note.
financial policy, investment banking, institutions, leveraged buyouts, liability management, valuation
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120.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Thien Pham affiliation not provided to SSRN
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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227 (37,320)
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Abstract:
In January 1990, the chief executive of a small yarn-production company must resolve a surprising cash shortage. The tasks for the student are to evaluate the causes of this shortage (using a complete "base-case" forecast given in the case) and then to assess the usefulness of various possible remedies suggested by company managers. In essence, the company is unable to liquidate a seasonal working-capital loan for the requisite 30 days each year. This situation arises from two classic causes: secular growth of the company and declining profitability. Possible remedies include reducing finished-goods inventory through more efficient transportation and warehousing, reducing credit terms to customers, just-in-time raw-materials supply, and switching from seasonal to level production. This case affords a thorough exercise of working-capital analysis and concepts. Student and instructor worksheet files are available for use with this case and teaching note.
banking, loan evaluation, financial-statement analysis, forecasting, inventory management, diverse protagonist, female, seasonality, international case, diversity case, derivatives, diversity
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121.
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Chrysler's Warrants: September 1983
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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224 ( 37,817) |
1
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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21
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1
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This case is a vehicle for discussing the theory and practice of option pricing through the valuation of warrants of Chrysler held by the U.S. government and of the loan guarantee provided by the U.S. government to Chrysler.
financial policy, investment banking, option pricing, security analysis, valuation, warrants
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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203
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1
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Abstract:
This case is a vehicle for discussing the theory and practice of option pricing through the valuation of warrants of Chrysler held by the U.S. government and of the loan guarantee provided by the U.S. government to Chrysler.
financial policy, investment banking, option pricing, security analysis, valuation, warrants
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122.
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Structuring Repsol's Acquisition of Ypf S.A.
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Feranda Pasquarelli affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Pablo I. Ciano Solving International USA
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Posted:
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21 Oct 08
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21 Oct 08
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221 ( 38,356) |
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Feranda Pasquarelli affiliation not provided to SSRN Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Pablo I. Ciano Solving International USA
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| Posted: |
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21 Oct 08
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21 Oct 08
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24
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Abstract:
In April 1999, the CEO of Repsol S.A., the large Spanish oil company, seeks to design the terms of an unsolicited tender offer to the shareholders of Argentinas largest oil company, YPF. The value to be paid per YPF share has been set. Remaining to be decided are: (a) form of payment, and (b) form of financing, if it is to be a cash deal. The task for the student is to sort through the advantages and disadvantages of three financing alternatives, using a framework such as FRICTO, and to make a recommendation. The objectives of this case are to: (1) illustrate the linkage between acquisition price, form of payment, and acquisition financing; (2) exercise analytical frameworks for comparing financing alternatives; (3) consider the important role of synergy expectations in designing financing. The case was prepared for use in an MBA elective on mergers and acquisitions, though could be easily adapted for teaching concepts of corporate financing.
corporate financial strategy, mergers and acquisitions
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Pablo I. Ciano Solving International USA Fernanda Pasquarelli Merrill Lynch - Sao Paolo
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| Posted: |
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21 Oct 08
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21 Oct 08
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197
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Abstract:
In April 1999, the CEO of Repsol S.A., the large Spanish oil company, seeks to design the terms of an unsolicited tender offer to the shareholders of Argentinas largest oil company, YPF. The value to be paid per YPF share has been set. Remaining to be decided are: (a) form of payment, and (b) form of financing, if it is to be a cash deal. The task for the student is to sort through the advantages and disadvantages of three financing alternatives, using a framework such as FRICTO, and to make a recommendation. The objectives of this case are to: (1) illustrate the linkage between acquisition price, form of payment, and acquisition financing; (2) exercise analytical frameworks for comparing financing alternatives; (3) consider the important role of synergy expectations in designing financing. The case was prepared for use in an MBA elective on mergers and acquisitions, though could be easily adapted for teaching concepts of corporate financing.
corporate financial strategy, mergers and acquisitions
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123.
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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26 Aug 01
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Last Revised:
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26 Aug 01
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220 (38,537)
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Abstract:
Turning analysis into effective action is a hallmark of the professional. Preparation for professional life, therefore, should exercise students' skills in drawing out action insights from analysis. Analytic work is, by its nature, descriptive. The role of the teacher is to take it farther, to motivate students to extract the actionable insights. The verb, "educate," derives from a Greek verb meaning, "to draw out." It might be said that a complete education in Finance draws out the action insights from analysis. What makes this hard is that the teacher cannot do this for the students; they must do it themselves. Making decisions and developing action implications cannot be served up the way a teacher might derive a formula. Students must discover it themselves. To compound matters, one cannot trust that students will do this unprompted. While most students have an appetite for Finance tools and concepts, they show an aversion for decisions and action. Making meaning of one's work is hard, and feels awkward to the novice. One builds skills of decision and action taking through trial-and-error exercise. As the former CEO of Citicorp, Walter Wriston, once wrote, "Good judgment comes from experience. Experience comes from bad judgment." To produce new professionals in business and finance, we need to exercise their skills in the classroom. This column offers suggestions for how to proceed.
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124.
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Fidelity Magellan Fund, 1995
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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219 ( 38,710) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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21 Oct 08
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13
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This case reviews the financial performance of the Fidelity Magellan Fund up to mid-1995. In essence, the Magellan Fund has managed to "beat the market" over time under three different fund managers despite its enormous size ($51 billion at the date of the case). The tasks for the student are to assess the adequacy of this performance, evaluate its likely sources, and opine on its sustainability. The case affords the opportunity to consider the appropriateness of various possible benchmarks in a risk-return framework and to assess the reasonableness of the efficient-markets hypothesis. The case can be used in an introductory finance course to present general information about equity markets and the behavior of large, sophisticated money managers.
market efficiency, portfolio management, return on investment, risk analysis, securities
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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206
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Abstract:
This case reviews the financial performance of the Fidelity Magellan Fund up to mid-1995. In essence, the Magellan Fund has managed to "beat the market" over time under three different fund managers despite its enormous size ($51 billion at the date of the case). The tasks for the student are to assess the adequacy of this performance, evaluate its likely sources, and opine on its sustainability. The case affords the opportunity to consider the appropriateness of various possible benchmarks in a risk-return framework and to assess the reasonableness of the efficient-markets hypothesis. The case can be used in an introductory finance course to present general information about equity markets and the behavior of large, sophisticated money managers.
market efficiency, portfolio management, return on investment, risk analysis, securities
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125.
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Astral Records Ltd., North America: Some Financial Concerns
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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217 ( 39,117) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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12
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Abstract:
A new CEO from outside the firm takes over following the sudden death of the former CEO. Included in the new CEO's in-box are pressing decisions concerning (1) the firm's financing needs, (2) capital equipment, and (3) a general assessment of the firm's financial performance. The task for the student is to analyze these issues and recommend action.
capital budgeting, cost of capital, financial analysis, forecasting, valuation
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Robert M. Conroy University of Virginia - Darden Graduate School of Business Administration Kenneth M. Eades University of Virginia - Darden Graduate School of Business Administration
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| Posted: |
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21 Oct 08
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Last Revised:
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21 Oct 08
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205
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Abstract:
A new CEO from outside the firm takes over following the sudden death of the former CEO. Included in the new CEO's in-box are pressing decisions concerning (1) the firm's financing needs, (2) capital equipment, and (3) a general assessment of the firm's financial performance. The task for the student is to analyze these issues and recommend action.
capital budgeting, cost of capital, financial analysis, forecasting, valuation
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126.
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Paginas Amarelas
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Mario Wanderley affiliation not provided to SSRN
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Posted:
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21 Oct 08
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Last Revised:
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21 Oct 08
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202 ( 6,986) |
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Robert F. Bruner University of Virginia - Darden Graduate School of Business Administration Mario Wanderley affiliation not provided to SSR |