Module ASB-3512:
Investment Banking

Module Facts

Run by Bangor Business School

10 Credits or 5 ECTS Credits

Semester 1

Organiser: Mr Alessio Reghezza

Overall aims and purpose

This module provides a comprehensive overview of investment banking. It begins with an explanation of the principal investment banking activities such as underwriting, advisory and trading. You will learn how to evaluate the performance of banks and firms. The course will stress the importance of different valuation tools like comparable companies analysis, precedent transaction analysis and discounted cash flow analysis that investment bankers use to evaluate a specific target company. We then discuss mergers and acquisitions (M&A) and leverage buyouts (LBO) which are one the most important activities of investment banks as they involve company’s shareholders, managers and employees. Finally, we will study trading and brokerage activities.

Course content

Introduction to investment banking; Tools of valuation: analysing banks financial performance; Tools of valuation: comparable companies analysis; Tools of valuation: precedent transaction analysis; Tools of valuation: discounted cash flow analysis; Mergers and acquisitions; Leverage buyouts.

Assessment Criteria

C- to C+

C- to C+

Average Standard: Much of the relevant information and skills mostly accurately deployed. Adequate grasp of theoretical/conceptual/practical elements. Fair integration of theory/practice/information in the pursuit of the assessed work's objectives. Some evidence of the use of creative and reflective skills.

threshold

D- to D+

Satisfactory standard: Some major omissions or inaccuracies in the deployment of information/skills. Some grasp of theoretical/conceptual/practical elements. Integration of theory/practice/information present intermittently in pursuit of the assessed work's objectives.

good

B- to B+

Very good performance Most of the relevant information accurately deployed. Good grasp of theoretical/conceptual/practical elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Evidence of the use of creative and reflective skills.

excellent

A- to A+

An outstanding performance, exceptionally able. The relevant information accurately deployed. Excellent grasp of theoretical/conceptual/practice elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Strong evidence of the use of creative and reflective skills.

Learning outcomes

  1. Understand the activities of investment banks such as: underwriting, advisory, trading and brokerage and asset management.

  2. Use the three tools of valuation (comparable company analysis, precedent transaction analysis and discounted cash flow analysis) to evaluate banks and companies.

  3. Analyse and critically discuss mergers and acquisitions. Students will learn the reasons that motivate companies to merge, the different types of merge and the actors involved in M&As.

  4. Analyse and critically discuss leverage buyouts. Students will have an understanding of the difference between M&As and LBOs as well as about the characteristics of a strong LBO candidate. They will be able to understand the macroeconomic factors driving recent trends in LBOs.

Assessment Methods

Type Name Description Weight
REPORT Group Coursework

Students are expected to: - evaluate companies or banks using the tools of valuations. -using econometric analysis to answer selected investment banking topics.

40
EXAM Exam

Students are expected to answer 5 questions. Two questions are calculations and three are essay-type questions.

60

Teaching and Learning Strategy

Hours
Lecture

Two hours of lectures per week over the semester.

20
Private study

Students are also directed to the relevant literature, including book chapters, journal articles (theoretical and empirical), books and internet sources that they are expected to read during their private study time. Private study is supported by e-mail contact with staff, and through materials posted on Blackboard.

80

Transferable skills

  • Literacy - Proficiency in reading and writing through a variety of media
  • Numeracy - Proficiency in using numbers at appropriate levels of accuracy
  • Self-Management - Able to work unsupervised in an efficient, punctual and structured manner. To examine the outcomes of tasks and events, and judge levels of quality and importance
  • Exploring - Able to investigate, research and consider alternatives
  • Information retrieval - Able to access different and multiple sources of information
  • Inter-personal - Able to question, actively listen, examine given answers and interact sensitevely with others
  • Critical analysis & Problem Solving - Able to deconstruct and analyse problems or complex situations. To find solutions to problems through analyses and exploration of all possibilities using appropriate methods, rescources and creativity.
  • Safety-Consciousness - Having an awareness of your immediate environment, and confidence in adhering to health and safety regulations
  • Teamwork - Able to constructively cooperate with others on a common task, and/or be part of a day-to-day working team

Subject specific skills

  • knowledge of the main current technical language and practices of accounting (for example, recognition, measurement and disclosure in financial statements; managerial accounting; auditing; taxation) in a specified socio-economic domain
  • skills in recording and summarising transactions and other economic events; preparation of financial statements; analysis of the operations of business (for example, decision analysis, performance measurement and management control); financial analysis and projections (for example, analysis of financial ratios, discounted cash flow analysis, budgeting, financial risks)
  • Analysis, deduction and induction. Economic reasoning is highly deductive, and logical analysis is applied to assumption-based models. However, inductive reasoning is also important. The development of such analytical skills enhances students' problem-solving and decision-making ability.
  • Quantification and design. Data, and their effective organisation, presentation and analysis, are important in economics. The typical student will have some familiarity with the principal sources of economic information and data relevant to industry, commerce, society and government, and have had practice in organising it and presenting it informatively. This skill is important at all stages in the decision-making process.
  • Framing. Through the study of economics, a student should learn how to decide what should be taken as given or fixed for the purposes of setting up and solving a problem, i.e. what the important 'parameters' are in constraining the solution to the problem. Learning to think about how and why these parameters might change encourages a student to place the economic problem in its broader social and political context. This 'framing' skill is important in determining the decision-maker's ability to implement the solutions to problems.
  • An ability to interpret financial data including that arising in the context of the firm or household from accounting statements and data generated in financial markets. The interpretation may involve analysis using statistical and financial functions and procedures such as are routinely available in spreadsheets (eg Microsoft Excel) and statistical packages. It may assume the skills necessary to manipulate financial data and carry out statistical and econometric tests (e.g. estimation and interpretation of asset pricing models; financial modelling and projections; event studies and residuals analysis; elements of time series analysis, such as serial correlation mean reversion, and stochastic volatility).
  • Numeracy: the use of quantitative skills to manipulate data, evaluate, estimate and model business problems, functions and phenomena.
  • Ability to work with people from a range of cultures.

Resources

Resource implications for students

none

Courses including this module