Guidelines for Term Project
The required topic for the paper is about a completed MERGER of the two public firms Heinz & Kraft Company. The subject is to make a comparison of the pre-merger performance, in terms of stock price, evaluate the transaction, and see the initial results. Many mergers see a premium paid for the company acquired, and a stock price decrease for the buyer.
The key elements of the analysis include Background of the companies including their relative performance; Details of the transaction, including the market valuation, fairness opinion or analysis by financial media; and Results including post-merger stock market performance (beware of per share numbers).
Details of the transactions include total price paid, PREMIUM, how the price is paid (stock, cash, notes, etc.), and changes in capital structure – at a minimum you need a debt-to-equity ratio before and after plus a discussion of any unique terms, such as a guaranteed buyback of stock issued to sellers.
Results include stock performance, again compared to some benchmark- overall market, industry group, comparable mergers. Often the accounting earnings will change as a result of the consolidation, but its shareholder value we are after here.
NOTE the special features, such as a former offer to merge that caused the target stock to go up, and not return to the original baseline, or other situations that explain why the premium is – or is not – as large as the industry/market norm.
You will be tempted to use per share comparisons, as the media often does; this can lead to faulty analysis, since the per share results are a function of shares outstanding, and this number can fluctuate significantly over time. Share prices over time (adjusted) are a different benchmark than just the per share earnings year after year.
I suggest a focus on pricing, such as pricing practices or strategies in a company, an industry or over a specific time frame. Other topics allowed with my approval.
Paper must consist of an analysis presented in term paper format with a minimum of 15 pages of text, net of title page, abstract, body text with appropriate headings, Conclusion, reference page and appendices.
Follow strict APA format, noting especially the running head, page numbers, title page +1st page titles, abstract and special reference style. There are links to the APA format and you may easily search the Internet for specific samples and examples.
Background material is limited to 1/3 of the paper for all companies involved, should include stock market performance, some benchmark of industry results for comparison, other recent mergers in the industry – often a pattern. Avoid per share comparisons.
I suggest as a guideline that you have a maximum 5 pages of background and description; about 5 pages of presenting the appropriate models and why they are applicable in this case; and about 5 pages to present your results, with appropriate graphics, and provide a Conclusion.
Remember APA format, especially on the References, and required pieces such as the Abstract, Title page and inside title.
The paper must include at least 10 published sources, such as texts, books, journals etc., of which 5 sources can be business periodicals such as INC., WIRED, Strategy & Business. Strictly follow APA requirements (style, formatting, and reporting sources etc.).
Guidelines for Term Project