Posts filed under 'SMF'

Merger Simulations!

Dr. George Pinteris, academic director for the Specialized Masters in Business Finance program at Fisher College of Business, wanted to try out a merger simulation with his Corporate Finance II classes. He assigned us the Wrigley-Mars merger cases to analyze. Half the class read the information to which Mars was privy, the other half Wrigley. My team and I were assigned to Mars (the buye), in the transaction. Dr. Pinteris used one lecture period as an initial discussion of the information to which both parties had access and to emphasize that there was more to this transaction than the price Mars paid to acquire Wrigley.

Source: http://store.darden.virginia.edu/

Source: http://store.darden.virginia.edu/

My group based our negotiation strategy on five factors, in addition to the price: the placement of the current target’s CEO; the plans for one of the target’s most treasured and iconic assets (Wrigley Headquarters in Chicago); the naming of the merged company; the independence of the target’s management post-merger; and the extent to which the acquirer can impose efficiency measures on the target after the merger. As the buyer, we packaged three deals with varying premia over the current share price and over the intrinsic value—an initial offer, a target offer, and a walkaway offer.

When we began negotiations, because we were the buyer, we made the first offer: a meager control premium over current market value, with a number of conditions that granted the target substantial operational independence. The target’s counteroffer was revealing: they mentioned that they wanted a more equitable share of the synergies from the merger and countered with a very high offer outside our acceptable range. We came back with a larger control premium, with a number of more restrictive terms than the initial offer. For example, we did not place the target’s CEO in as important a position and we insisted on greater efficiency measures. The target countered with $79, still intent on capturing larger portions of the synergies in the transaction, but this time they disapproved of our demotion of the target CEO. We offered to increase our price to $75 and place the target CEO on the Board of Directors. They offered to go down to $77 with the same conditions. My group did not want to increase our price, but we had reached a set of conditions with which we were very pleased. When we offered an additional board seat, the other team acted utterly taken by surprise. After about five minutes of hushed discussion in their group hunched over their own valuations in Excel, they accepted. It was a term that neither of our groups had seriously considered, but it was something that ultimately allowed us to close the deal at a price more amenable to us, the buyer.

We had begun the negotiations with the goal of getting the lowest price with terms that would preserve Wrigley’s independence. Instead, we walked away by paying $3 over our target, but the counterparty had practically given us as much as we needed to achieve synergies by ceding decision-making authority over its Chicago headquarters, over its management and employees, and general operational aspects of the business—Wrigley had practically handed us all the synergies we needed to make the deal worth it.

In Dr. Pinteris’ next lecture, we discussed our experiences in the merger. All of our negotiation experiences had been quite different, and Dr. Pinteris used this lecture to illustrate the different scenarios that play out with different zones of agreement on price and to illustrate the importance of qualitative factors in the negotiations. I thoroughly enjoyed this simulation that Dr. Pinteris set up for us—it was hands-on and engaging, and I think I learned more about M&A negotiations than if I had simply read the case and participated in the class discussion.


The North Market

One of the staples of Columbus is the North Market. The North Market is basically a farmer’s market, and a fantastic one at that. You can buy fresh salsa (AMAZING), fresh fruits, homemade chocolate, homemade bread, different cultural foods, homemade popcorn, and fresh spices.

Spices Salsa

 

I would like to touch on the salsa and spice shops. The salsa shop has a vast array of salsas, hot sauces and a few other things. The salsa is the best I have ever had. I usually like salsa with a kick, but I have taken a liking to roasted garlic and mild salsa. Both of these are very sweet and VERY good.

The spice shop is by far my favorite, though. The spice shop has a vast array of spices. Most of the spices do not contain salt which keeps them from being “diluted.”  These spices are very potent and very good. A recipe for chili I had called for 2.5 tablespoons and 1 tablespoon was more than enough. Their chili seasoning has won multiple contests. They also have extracts, peppers, sticks of cinnamon, etc. What you can buy and the combinations are almost endless.

A full list of vendors can be seen here.

I highly recommend visiting this place!


A November Treat

“A snowball in the face is surely the perfect beginning to a lasting friendship.” 
― Markus ZusakThe Book Thief

 

One of the misconceptions about Ohio and snow is the need for there to be unbearable temperatures and for it to be just down-right cold! Well, I got hit in the face with a snowball today and found a lasting relationship with Columbus. I looked outside and thought, “UGH! Snow…”

Now this looks cold!

Now this looks cold!

Then…

I walked outside and thought it’s not even cold, and the snow is actually snow and not ice and slush and all the other nasty things that make me hate winter. Coming from the south, I thought this experience would be an awful one, but I am in love with this weather.

Fisher

Doesn't even look cold!

Doesn’t even look cold!

 

Other than the weather not being nearly as bad as I thought it would be, you can see 3 of the 5 buildings at Fisher in the pictures above. One of the best things about Fisher is, I can get to all 3 of these buildings through temperature controlled underground tunnels.

Yes… You read that correctly. There are underground tunnels at Fisher. I can go to Mason Hall and get a hot chocolate or coffee and walk back to class without ever stepping outside.

I can definitely say that when I was hit in the face with the snowball this morning, it made a lasting relationship. I cannot wait for the months to come in Columbus and at Fisher!

 

 


Valuing Public Companies

Sometimes you do assignments for classes or complete classes without realizing just how valuable that assignment or class was. One such assignment for me was a comprehensive valuation report on a publicly-traded company in our introductory finance course in the SMF program. Our professor and the academic director of the program, Dr. George Pinteris, gave us certain parameters for the projects—such as no companies in the industrials or financials industry verticals. He also restricted us from valuing certain companies that other students had done before, such as Nordstrom, L Brands, and Coca-Cola. Professor Pinteris segmented our class into groups. My group chose The Boeing Company. For the report, we had to use Capital IQ, Bloomberg, IBIS World Industry Reports, and several other sources of information. For example, in understanding the operating margins for Boeing, one must understand the price directions for key inputs, such as steel, composites, titanium, and aluminum. To understand which way those prices are moving, one must understand key economic assumptions and inputs for the prices of those commodities.

Capital IQ allows users to generate fast tables of comparable companies

Capital IQ allows users to generate fast tables of comparable companies

I especially enjoyed this project because it drew on the strengths of my team members. One member has a background in energy investments and so had keen insights into oil and natural gas commodity markets. My own background in public policy and politics informed the analysis of Boeing’s strategic direction as the United States Congress wrestles with the issue of how to stimulate exports (Boeing earns half its revenues by exporting goods). All of us were proficient at financial modeling, but one team member was especially adept and provided the team with reams of data and analysis on Boeing’s historical and projected financials. Her analysis includes several valuation methods, such as dividend discount model, discounted cash flow using multiples, transaction multiples, and market multiples. Dr. Pinteris stressed the need to produce a professional report, with an accompanying Powerpoint and presentation. In short, Dr. Pinteris’ project stressed a number of skills needed in the financial industry: teamwork, professionalism, modeling skills, and strategic thinking.


Fisher Works for Students

As an economics undergrad with no formal finance background, Fisher College of Business’ course structure has been highly valuable to me. Fisher splits the semesters into terms, and students take five courses each term. This allows me to take many courses and broaden my finance background very quickly and comprehensively. Thus, I’ve been able to take such electives as financial modeling and international finance, and for next term, private equity, enterprise risk management, and accounting for M&A, on top of core courses.

One invaluable elective I took last term was Financial Institutions with Dr. Isil Erel. Professor Erel is an expert on banking and capital requirements, and is heavily involved in research on corporate governance and M&A. This course focused heavily on the development of the financial services industry after the deregulation of the banking industry in the 1980s or 1990s, modeling the impact of interest rate changed on banks’ balance sheets, hedging interest rate risk, modeling credit risk, accounting for off-balance sheet items, the logistics of securitization of loans, and applying capital requirements. We also discussed the root causes and impacts of the financial crisis in 2008 and the responses of the regulators. Cases for the class focused on hedging interest rate risk with swaps and analyzing exchange rate ratios for bank mergers. While the final exam was quite difficult, I am now equipped with the tools to analyze more rigorously the risks facing financial institutions.

Huntington Bank, based in Columbus, OH

Huntington Bank, based in Columbus, OH

To supplement our course, Dr. Erel invited two bank executives, Don Kimble, Chief Financial Officer of KeyCorp, and Helga Houston, Chief Risk Officer of Huntington Bank, to speak to our class. During these sessions, these executives fielded questions about all of the topics we were learning in our course and covered additional topics, such as the importance of information technology innovation in the sector and reputational risk.

KeyCorp, based in Cleveland, OH

KeyCorp, based in Cleveland, OH

Dr. Erel and Financial Institutions are just one example of how students gain from Fisher’s programs—in many other courses, professors are providing us valuable real-world skills, putting us in situations where we need to perform, and introducing us to executives and alumni who can help us in the job search. Time and time again, Fisher is working for its students.


Bulls vs The Return of the King

Being in Columbus, one would assume that all sports-related events revolve around Ohio State. Although that is true for the majority of the year, Columbus is also home to the NHL Blue Jackets. And the Cleveland Cavaliers usually play one exhibition game right before the start of the regular NBA season in Columbus at the Schottenstein Arena.

Bulls vs The Return of the King: Or shall I say, the D Rose dominating the court. October 20th, the Schottenstein Arena hosted the Cleveland Cavaliers and the Chicago Bulls. Even though this was a preseason game, the Arena was packed in hopes of seeing LeBron, K Love, and Kyrie taken the floor and play D Rose and the Bulls. A group of us from the SMF program had very good seats and took advantage of the festivities by showing up about 3-4 hours early. There was tents for free Cavs t-shirts and places to play basketball and eat. Quite a few people were down on the court meeting LeBron, D Rose, and K Love.

Warming up D Rose LeBron

While the scene was not near as exciting as it was in LeBron’s return home for his first regular season game as a Cavs, again, it was definitely buzzing with excitement.

Walk outs

 

The game itself was exciting until the Cavs pulled away in the 3rd and 4th quarter, but Derrick Rose kept it interesting for as long as possible. Derrick Rose ended the night with 30, as the Bulls fell short by 9. The surprise of the night was Anderson Vaerjao who put up 22 points and 8 rebounds. Kyrie had 28 points while LeBron only had 18. The most interesting part of the night was in the 4th quarter during LeBron’s curtain call. The place erupted as he came off the court.

With events like seeing LeBron play without even having to drive to Cleveland, who wouldn’t want to come to Columbus?!?!


Food Perks Around Fisher

One of the perks of constantly being on Fisher’s and Ohio State’s main campus is the multitude of places that deliver food. Once I find a place I love, I usually do not go anywhere or try anything new. Being a student ambassador, I am constantly looking for places to deliver while I am working. Since not many places in Arkansas delivered, I stuck with Jimmy Johns for starters. The subs are fantastic and the food is delivered in like 5 minutes. I usually get this amazing ham and turkey sandwich with bacon.  If you are looking to go outside the box a little, I would advise my new favorite place, Currito (known to me as burrito with a C). This place is FANTASTIC and also reasonably priced! For $10 I can get a burrito bowl exactly how I want and a strawberry banana smoothie! Their slogan, “Burrito without Borders” fits them perfectly. You can get anything you want on your burrito, or burrito bowl, within reason. While the delivery time is a little slower, it is DEFINITELY worth it.

Burrito...with borders in this case

Burrito…with borders in this case

By the time you finish reading this, the freaky fast delivery will be at your doorstep

By the time you finish reading this, the freaky fast delivery will be at your doorstep

Now to the splurge meal that gets its own paragraph. Adriatico’s is like a little slice of heaven…more like a big slice, actually.  During my visit last year, I experienced the perfectness that is Adriatico’s. No pizza I have ever had even comes close, and they have specials constantly for college students. For instance, on Sundays with your BuckID, everything is 20% off. On Mondays and Tuesdays, as well, large pizzas are $12.55.

Best pizza on EARTH!

Best pizza on EARTH!

 

I honestly would be able to imagine life and Fisher without these three places. When Mother Teresa said, “If you can’t feed a hundred people, just feed one,” I wonder if she knew this would be my life story, constantly feeding myself delivery at Fisher…hmm….


Resources at Your Fingertips

If you are pursuing a career in finance, it is important not just to have a conceptual understanding of the discipline, but also to keep up on the news and to know how to use different software programs. The Specialized Masters in Finance (SMF) program at the Fisher College of Business places a premium on just these two things.

With respect to software training, the program has adopted a curriculum that forces students to learn how to use Excel in their sleep, use certain Excel add-ons like Crystal Ball (which includes Monte Carlo analysis), CapitalIQ, and the ins and outs of Bloomberg terminals, the industry standard for gaining corporate information. In order to teach these software programs, Fisher has retained a former institutional investor, Professor Matt Sheridan. In addition to these software programs, Fisher students have free access to a plethora of other resources, such as IBISWorld Industry Reports, Thomson Research Reports, and LexisNexis, all of which are very helpful in researching companies, sectors, and markets for class projects. Knowledge of these programs is often prerequisite for many of the positions to which finance students will apply. In my interviews, I haven’t gotten brownie points for having these programs on my résumé—but I doubt I would have gotten an interview without some of them.

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This is a typical screenshot of a Bloomberg terminal. Look confusing? Trust me, it won’t be after a few weeks in the program.

Dr. George Pinteris, the director of the SMF Program, likes to tell students that when finance professionals get together, they don’t talk about the risk premium over a risk-free asset that they use in the Capital Asset Pricing Model or whether they use the current portion of long-term debt when calculating the cost of debt. Instead, they discuss current events. Dr. Pinteris and other professors expect (but do not require) that students read the Wall Street Journal., Financial Times, and/or The Economist. Personally, I like to supplement my reading of WSJ and FT with American Banker. Whether students access these resources through online university library resources or through special discounts Dr. Pinteris distributes to students, students have access to very valuable resources. A full year’s subscription to American Banker costs about $1,400, while full year subscriptions to WSJ and FT cost a little over $300 each. During some of my interviews, mentioning a recent relevant article I read in FT or AB has often been a catalyst that made a good interview a phenomenal one.

The SMF Program not only gives students a solid academic background in finance, but also an excellent technical and professional background as well.


Staying at Fisher makes me feel proud!!!

Staying at Fisher makes me feel proud!!!

Different from most of my classmates in the SMF program, who joined the Fisher family a few weeks ago, I am so proud that I am a senior buckeye!!! I studied finance in Fisher for my undergraduate and I decided to stay at Fisher for my graduate without any doubt. I only applied one graduate school and obviously that is Fisher! In this post, I am going to share with why Fisher is an awesome school.

You will have tremendous opportunities.

For example, there are hundreds of companies recruiting Fisher students in the career fair every year. There are more than one thousand student organizations in OSU. If you are a sports fan, we have the best gym—RPAC! And we have a magnificent football field with a capacity of 100,000 audiences, and so many awesome buckeyes!!!

autumn scriptohio 2014_sif_11 rpac_weight-room1319

 

Faculties are always willing to help. 

I have already seen a post from my classmate, describing how helpful and considerate faculties are. Only with proper mentorship, can students fully take advantages of those tremendous opportunities. And this is exactly what Fisher has.

Take myself as an example, when I was an undergraduate student at Fisher, I was motivated by Professor Brandl’s Global finance class. I gained great interests in financial history and financial regulations. I asked a lot of questions and Professor Brandl encouraged me to write a research paper on this topic. During the research process, I realized that creating a student organization related to business ethics would be a great testimony to some of my research findings. Professor Brandl supported my idea by being the advisor of my organization and coached me patiently throughout the whole process. Partly due to what I have achieved with the research project and the student organization, I am very humbled to be awarded the highest honor in Fisher—Pace Setter Award.

Fisher is the school that you can be exposed to tremendous opportunities and get tremendous support from top-ranking faculties. Fisher is the school that encourages students to “GO BEYOND” and be the best. Fisher is the school that I really love and feel proud that I can stay longer. Till now, school has started for a month for SMF students. I am very confident that I have made a brilliant decision to stay at Fisher for my graduate study.


The Interview

When I used to hear the word “interview,” the most daunting images  would come to mind. Whether it be getting drilled on finance questions by a recruiter that you don’t know the questions to, forgetting your resume, or even worse, forgetting your interview time, the interview process can be a scary, scary thought. I have a Nationwide interview for the Financial Leadership Rotation Program. It is an 18-month rotation program in which you will work with top executives in strategy, finance, investments, M&A, enterprise risk management and much more. The job is mainly open to 2nd year MBAs, so to get an interview without being one, it took some work, but it is possible. So, if you know you are interested in finance, do not think this program is inferior to the MBA and that you are somehow at a disadvantage.

Career Management offers tons of resources; from helping you perfect your cover letter to doing mock interviews beforehand. You’ll even find out that some of the professors have extensive knowledge with the company you are interviewing for, or have even worked there, especially companies based in Columbus. If you utilize your resources here, you will be ready.

Normally, I am one to be extremely nervous for a position that I am highly interested, especially with a well-respected company. However, today that case isn’t true. Between my research and the help of Career Management, I am well-prepared to fight anything that comes my way. I prepared for days and know I put in the work to do well.

And  cue the Peyton Manning hum to..."Nationwide is on your side."

And cue the Peyton Manning hum to…”Nationwide is on your side.”

Update: I feel like the interview went extremely well. The mock interview with the professor helped tremendously. He helped me understand certain questions that I would have never thought of. So … definitely utilize the help of your professors. I will say it again, they are among your greatest assets in the SMF program.


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