EPOKA UNIVERSITY
FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES
DEPARTMENT OF BANKING AND FINANCE
COURSE SYLLABUS
2023-2024 ACADEMIC YEAR
COURSE INFORMATIONCourse Title: INVESTMENT BANKING |
| Code | Course Type | Regular Semester | Theory | Practice | Lab | Credits | ECTS |
|---|---|---|---|---|---|---|---|
| BAF 310 | C | 6 | 3 | 0 | 0 | 3 | 6 |
| Academic staff member responsible for the design of the course syllabus (name, surname, academic title/scientific degree, email address and signature) | NA |
| Main Course Lecturer (name, surname, academic title/scientific degree, email address and signature) and Office Hours: | M.Sc. Athanasios Paloudis apaloudis@epoka.edu.al |
| Second Course Lecturer(s) (name, surname, academic title/scientific degree, email address and signature) and Office Hours: | NA |
| Language: | English |
| Compulsory/Elective: | Elective |
| Study program: (the study for which this course is offered) | Bachelor in Banking and Finance (3 years) |
| Classroom and Meeting Time: | 64 hours |
| Teaching Assistant(s) and Office Hours: | NA |
| Code of Ethics: |
Code of Ethics of EPOKA University Regulation of EPOKA University "On Student Discipline" |
| Attendance Requirement: | |
| Course Description: | This course covers; - management and practices of investment banking operations, - the business activities of mergers and acquisitions, financing and investment; and, the creation of value through financial advisory services. - the business practices of private equity, hedge funds and trading operations; and, the role of each in facilitating investment. |
| Course Objectives: | 1. Understand Investment Banking operations 2. Understand how Investment Banking do businesses actually add value for their customers—and, make money for their employees, partners and shareholders 3. Develop strategies for conflicts exist across the various Investment Banking business lines and practices |
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BASIC CONCEPTS OF THE COURSE
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| 1 | The students are gained the ability to look at the problems of daily life from a broader perspective. They gain the needed skills not only to understand economic problems in banking and finance but also to construct a model and defend in meaningful way. |
| 2 | They have knowledge about the finance and banking. |
| 3 | They have knowledge about the money and banking. |
| 4 | They have knowledge about the international finance and banking. |
| 5 | They have ability to use mathematical and statistical methods in banking and finance. |
| 6 | They know how to use computer programs in both daily office usage and statistical data evaluations in banking and finance department. |
| 7 | They have necessary banking and finance skills that needed in private and public sector. |
| 8 | They are intended to be specialist in one of departmental fields that they choose from the list of general economics, finance economics, public finance, corporate finance, finance management, international finance markets and institutions, banking and central banking, international finance and banking, money and banking, international trade and banking. |
| 9 | They have ability to utilize fundamental economic theories and tools to solve economic problems in banking and finance. |
| 10 | They are aware of the fact that banking and finance is a social science and they respect the social perspectives and social values of the society’s ethics. |
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COURSE OUTLINE
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| Week | Topics |
| 1 | Introduction. Investment banking definition and transformation. The investment banking throughout the years, the important facts and the historical crises. The investment banking nowadays, the practices and its basic terminology. |
| 2 | Importance of Investment Banking, Structure, 3D model. Core or traditional investment banking, which can be further broken down into: (a) underwriting services, which consist in assisting firms raising capital on financial markets and (b) advisory services, which consist in assisting firms in transactions such as mergers, acquisitions, debt restructuring, etc. Trading and brokerage: it consists in purchasing and selling securities by using the bank’s money (proprietary trading) or on behalf of clients (brokerage). Asset management: it is a very heterogeneous area itself. Generally speaking, it consists in managing investors’ money. It can be broken down into two main categories: (a) traditional asset management (i.e., open end mutual funds) and (b) alternative asset management, which includes real estate funds, hedge funds, private equity funds, and any other vehicle investing in alternative asset classes. |
| 3 | Comparable Companies Analysis provides a market benchmark against which a banker can establish valuation for a private company or analyze the value of a public company at a given point of time. It has a broad range of applications, most notably for various M&A situations, IPOs, restructurings and investment decisions. |
| 4 | Comparable Companies Analysis. How to select the universe of the comparable companies, how to locate the necessary financial information and the spread key statistics, ratios and trading multiples. |
| 5 | Benchmark the Comparable Companies and Determine the Valuation. The first stage of the benchmarking analysis involves a comparison of the target and comparables’ universe on the basis of key financial performance metrics. These metrics include measures of size, profitability, growth, returns, and credit strength. They are core value drivers and typically translate directly into relative valuation. Benchmarking the trading multiples enables the banker to view the full range of multiples and assess relative valuation for each of the comparable companies. As with the financial statistics and ratios, the means, medians, highs, and lows for the range of multiples are calculated and displayed, providing a preliminary reference point for establishing the target's valuation range. Once the trading multiples have been analyzed, the banker conducts a further refining of the comparables universe. Depending on the resulting output, it may become apparent that certain outliers need to be excluded from the analysis or that the comparables should be further tiered. |
| 6 | Precedent Transaction Analysis, M&A, LBO. Precedent transactions analysis, like comparable companies analysis, employs a multiples-based approach to derive an implied valuation range for a given company, division, business, or collection of assets (“target”). It is premised on multiples paid for comparable companies in prior M&A transactions. Precedent transactions has a broad range of applications, most notably to help determine a potential sale price range for a company, or part thereof, in an M&A transaction or restructuring. |
| 7 | Discounted Cash Flow Analysis. Discounted cash flow analysis (“DCF analysis” or the “DCF”) is a fundamental valuation methodology broadly used by investment bankers, corporate officers, university professors, investors, and other finance professionals. It is premised on the principle that the value of a company, division, business, or collection of assets (“target”) can be derived from the present value of its projected "free cash flow" (FCF). A company's projected FCF is derived from a variety of assumptions and judgments about its expected financial performance, including sales growth rates, profit margins, capital expenditures, and "net working capital" (NWC) requirements. The DCF has a wide range of applications, including valuation for various M&A situations, IPOs, restructurings, and investment decisions. |
| 8 | Midterm exam. It will be based on chapters 1 to 5 and to the presentation material. |
| 9 | LBO Analysis. LBO analysis is the core analytical tool used to assess financing structure, investment returns, and valuation in leveraged buyout scenarios. The same techniques can also be used to assess refinancing opportunities and restructuring alternatives for corporate issuers. LBO analysis is a more complex methodology than those previously discussed because it requires specialized knowledge of financial modeling, leveraged debt capital markets, M&A, and accounting. At the center of an LBO analysis is a financial model (the “LBO model”), which is constructed with the flexibility to analyze a given target's performance under multiple financing structures and operating scenarios. |
| 10 | Mergers and Acquisitions - Sell-Side M&A. The sale of a company, division, business, or collection of assets (“target”) is a major event for its owners (shareholders), management, employees, and other stakeholders. Consequently, the seller typically hires an investment bank and its team of trained professionals (“sell-side advisor”) to ensure that key objectives are met and a favorable result is achieved. In many cases, a seller turns to its bankers for a comprehensive financial analysis of the various strategic alternatives available to the target. These include a sale of all or part of the business, a recapitalization, an initial public offering, or a continuation of the status quo. |
| 11 | Mergers and Acquisitions - Buy-Side M&A. Mergers and acquisitions (“M&A”) is a catch-all phrase for the purchase, sale, and combination of companies, their subsidiaries and assets. M&A facilitates a company's ability to continuously grow, evolve, and re-focus in accordance with ever-changing market conditions, industry trends, and shareholder demands. In strong economic times, M&A activity tends to increase as company management confidence is high and financing is readily available. Buyers seek to allocate excess cash, outmaneuver competitors, and take advantage of favorable capital markets conditions, while sellers look to opportunistically monetize their holdings or exit non-strategic businesses. In more difficult times, M&A activity typically slows down as financing becomes more expensive and buyers focus on their core business, as well as fortifying their balance sheet. At the same time, sellers are hesitant to “cash out” when facing potentially lower valuations and the fear of “selling at the bottom.” |
| 12 | Review of chapters referred to Comparable Companies Analysis, Discounted Cash Flow, Leveraged Buy Outs, Sell-side and Buy-side Mergers and Acquisitions. |
| 13 | Project Presentations. The presentation is for explaining your project - both the outcome and the process - to the evaluator. The presentation complements the project documentation and the work done demo. It gives to the evaluator a chance to clear up doubts by asking questions on the spot, for example. |
| 14 | Project Presentations second part. |
| Prerequisite(s): | |
| Textbook(s): | Rosenbaum, Pearl and Harris (2020). Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions. Wiley |
| Additional Literature: | |
| Laboratory Work: | |
| Computer Usage: | |
| Others: | No |
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COURSE LEARNING OUTCOMES
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| 1 | Understand Investment Banking operations |
| 2 | Understand how Investment Banking do businesses actually add value for their customers—and, make money for their employees, partners and shareholders |
| 3 | Develop strategies for conflicts exist across the various Investment Banking business lines and practices |
|
COURSE CONTRIBUTION TO... PROGRAM COMPETENCIES
(Blank : no contribution, 1: least contribution ... 5: highest contribution) |
| No | Program Competencies | Cont. |
| Bachelor in Banking and Finance (3 years) Program | ||
| 1 | The students gain the ability to look at the problems of daily life from a broader perspective with an increased awareness of the importance of moral/ethical considerations and professional integrity in the workplace. | |
| 2 | They develop their knowledge and understanding of banking and finance including concepts, theories, and analytical tools that serve both in national and international markets. | |
| 3 | They gain an understanding of the role of financial management in business firms and the essentials of corporate finance and further develop their knowledge in the field. | |
| 4 | They are able to apply valuation models to estimate the price of different financial assets, measure risk and describe the risk-return tradeoff. | |
| 5 | They are provided with the knowledge and understanding of the regulatory framework and functioning of banking system and central banking as well as international banking system. | |
| 6 | They are able to understand and use fundamental economic theories and tools to solve economic problems in banking and financial services industry. | |
| 7 | They have the ability to develop and utilize accounting, financial and economic data as well as other information to solve different business problems by making use of basic mathematical and statistical models. | |
| 8 | They are expected to develop their numerical and IT skills as well as knowledge of databases in order to address the significant development in the delivery and use of financial services known as FinTech. | |
| 9 | They develop their ability to think critically, do research, analyze, interpret, draw independent conclusions, and communicate effectively, both individually and as part of a team. | |
| 10 | They are provided with opportunities to acquire the necessary skills and competencies to develop professionalism in the banking and financial services industry or to move on to further study within the discipline. | |
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COURSE EVALUATION METHOD
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| Method | Quantity | Percentage |
| Midterm Exam(s) |
1
|
30
|
| Project |
1
|
20
|
| Final Exam |
1
|
40
|
| Attendance |
10
|
|
| Total Percent: | 100% |
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ECTS (ALLOCATED BASED ON STUDENT WORKLOAD)
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| Activities | Quantity | Duration(Hours) | Total Workload(Hours) |
| Course Duration (Including the exam week: 16x Total course hours) | 16 | 4 | 64 |
| Hours for off-the-classroom study (Pre-study, practice) | 16 | 2 | 32 |
| Mid-terms | 1 | 12 | 12 |
| Assignments | 0 | ||
| Final examination | 1 | 16 | 16 |
| Other | 1 | 26 | 26 |
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Total Work Load:
|
150 | ||
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Total Work Load/25(h):
|
6 | ||
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ECTS Credit of the Course:
|
6 | ||
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CONCLUDING REMARKS BY THE COURSE LECTURER
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The main objective of this course is to provide conceptual and practical knowledge of the investment banking and the processes on its several areas, starting from the steps of assessment and the methods and ending to secondary market activities in investment banking operations and services. In parallel, the course offers an initial approach on secondary market operation and its importance as well as the stock market initial approach. |