UNIVERSITY OF COLORADO BANKING Leeds School of Business Prof Ronald W Melicher Office Room 462 Office Hours T W 1 00 2 30 PM by Appointment SEMINAR IN INVESTMENT FNCE 4820 Section 801 Fall 2003 Wednesdays 3 30 6 15 PM Classroom BUS 124 E Mail Ronald Melicher Colorado EDU Phone No 303 492 3182 Course Description and Objectives Investment bankers advise firms on the type and pricing of securities Investment bankers also market to the public a firm s stocks and bonds via an underwriting arrangement Stock underwriting includes by initial public offerings IPOs and seasoned issues Investment bankers also help firms design hybrid securities such as convertibles bonds with warrants and other exotic securities designed to meet a firm s specific project financing need or to appeal to particular investor desires or niches Investment bankers advise and assist firms to acquire other firms sell their own firms spin off or sell specific operating unity go private through leverage buyouts LBOs and management buyouts MBOs This course helps prepare a student for a career in investment banking Required Materials A Textbooks J Chris Leach and Ronald W Melicher Entrepreneurial Finance First Edition Mason Ohio SouthWestern Publishing 2003 referred to as L M We use selected chapter from this text to develop skill sets relating to financial statements forecasting determining additional financing needs estimating the value of a firm using discounted cash flow DCF methods and developing a basic understanding of the relevant laws that govern the issuance of securities Aswath Damodaran Investment Valuation Second Edition University Edition New York John Wiley Sons 2002 referred to as IV This text serves as an important reference text for determining the cost of financial capital further understanding of the use of discounted cash flow DCF approaches to value firms determining firm values using relative valuation methods e g revenue and earnings multiples and valuing non equity securities B Case Packet A collection of investment banking related Harvard Business School and Darden Business School cases is available at the CU Campus Bookstore Reference Textbooks Richard A Brealey and Steward C Myers Principles of Corporate Finance Seventh Edition McGrawHill Irwin 2003 Stephen Ross Randolph Westerfield and Jeffrey Jaffe Corporate Finance Sixth Edition Irwin McGraw Hill Irwin 2002 Eugene F Brigham and Michael C Ehrhardt Financial Management Tenth Edition Dryden Press 2002 General Readings Miriam Naficy The Fast Track Broadway Books 1997 Michael Lewis Liar s Poker Penguin Books 1990 John Rolfe and Peter Troob Monkey Business Warner Books 2001 Peter L Bernstein Capital Ideas The Free Press 1992 Peter L Bernstein Against the Gods John Wiley Sons 1998 Procedures and Expectations Students are expected to abide by the University of Colorado Student Honor Code attend all class sessions be prepared to discuss each day s assigned topic or subject matter and behave in a professional manner Honor code information is available at http www colorado edu academics honorcode The 2 honor code pledge is On my honor as a University of Colorado at Boulder student I have neither given nor received unauthorized assistance on this work Students with disabilities who qualify for academic accommodations must provide a letter from Disability Services which determines accommodations based on documented disabilities and discuss specific needs with the professor preferably during the first two weeks of class See http www colorado edu sac disabilityservices The classroom behavior policy is available at and University policies regarding academic and behavior issues can be reviewed at http www colorado edu policies index Classroom attendance and participation is expected and required Students are expected to display their name card at each classroom session Class participation in case discussions both voluntary and involuntary through cold calls is important to the class take away Assignments Students will self select into teams or groups of four Each group will be responsible for submitting two major bolded and two minor bolded or non bolded case write ups and presenting one of the two majors and leading the discussion in one of the minor cases A signup sheet will be provided Additionally each group will develop and prepare analysis and presentations materials to support a pitch to a corporate client preparing for an initial public offering The corporate client will be designated during the latter part of the course These presentations will be rehearsed and professional with multimedia content The pertinent background information for the client pitch will be provided during the course This part of the course is a competition and therefore groups are cautioned regarding too much sharing of approach and presentation strategy Students must also be involved in the preparation and delivery of the Investment Banking Forum While you may freely reference outside sources including other groups of students each write up must be a group s own product and no portion can be copied or extracted from existing or other groups write ups Major written case analyses excluding the final IPO project should be in an executive summary format and consist of a written analysis of approximately four 4 pages plus up to four 4 pages of figures tables and or spreadsheet output The Oral presentation of a case should be 20 25 minutes Minor case write ups should be in the form of a one page executive summary and one page of exhibits or analysis Grading Procedures The final grade will be based on Case analyses Write ups and In class Presentations 40 Written and Oral Presentation of the Client Pitch IPO Project 40 Individual Class Participation including Forum preparation 20 COURSE OUTLINE Note Problem and other assignments will be made during class sessions L M and IV Textbooks Date Topics Case Packet Cases Misc Week 1 Aug 27 Course Objectives Goals General Books Readings Valuation Basics IV Chs 1 2 Week 2 Sept 3 Week 3 Sept 10 Investment Banking Players Markets Introduction to Financial Planning Book The Fast Track L M Ch 6 Projecting Financial Statements Financial Distress Restructurings Case The Body Shop International L M Ch 14 3 Week 4 Sept 17 Financial Planning Value Creation Valuation I Direct Equity Method Case Advanced Medical Technology L M Ch 9 Cost of Capital Basics Cash Flows to Equity L M Chapter 7 IV Ch 8 IV Chs 12 14 Estimating the Cost of Capital The IPO