New: Mergers & Acquisitions in Practice Program

Three-day program at WHU Campus Düsseldorf from June 8 – 10, 2017

WHU – Otto Beisheim School of Management is offering a new Executive Education Program titled “Mergers and Acquisitions in Practice Program” in June 2017. During the three-day program, executives are equipped with the necessary tools and methods to manage the main challenges related to mergers and acquisitions.

A high share of mergers and acquisitions transactions (M&As) fails because opportunities and risks are not analyzed and managed rigorously. Additionally, prior studies indicate that a large number of mergers and acquisitions fail to generate the expected return for acquirer shareholders and that some of them even lead to substantial value destruction. Nevertheless, M&As are an important growth strategy for firms. Since opportunities and risks are closely connected, M&As need to be strategically planned and carefully executed. Mastering the mergers and acquisitions process from the idea origination through post-merger integration is, therefore, key to achieving the projected synergy value.

The program philosophy is rooted in the why? how? do! learning approach. “The focus is first on understanding why it is important to implement M&As, and in which contexts M&As are a value-creating response to a firm’s growth challenges. The next step is to understand how to effectively and efficiently implement M&As,” explains Professor Dr. Nihat Aktas, who holds the Chair of Mergers and Acquisitions at WHU and is the program’s director.

Discussions and exchanges of ideas with WHU faculty, top-notch industry experts, and a select group of peers allow participants to gain experience in handling the M&A process from the initial idea to post-merger integration. Course participants will be put in a real business situation with the help of case studies and computer applications. Designed to improve the participants’ M&A performance in particular, the Mergers and Acquisitions in Practice Program will teach them strategies and tools that are ready to use in order to help participants better implement and assess their M&A strategy.

“A failure to observe essential M&A principles could be highly disruptive for the firm’s ongoing business and for the careers of senior executives involved in deal-making”, says Dr. Rebecca Winkelmann, Managing Director Executive Education at WHU. “This is why managers in this field should aim for targeted continuing education opportunities with a practical orientation.”

The program is specifically designed for young talents and experienced managers who aim at working in positions with a greater focus on strategy or corporate development in their firms. Further, the program is conceptualized for senior executives whose firms are potential acquirers or targets for acquisition by another firm.

Please find detailed information on the program website

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WHU-Professor Lutz Kaufmann comments on negotiations with US-President Donald Trump

There is much talk at the moment about Donald Trump and his recognizable and assumed negotiation style. Firstly, the US President is felt to be erratic and narcissistic – and it is always advisable to adapt one’s negotiation style to the other person’s personality profile. Secondly, there are people who even see Trump’s unpredictability as possibly masking a clever strategy that gives him a starting advantage in any negotiations. That too is correct.

Intelligently structured negotiations

However, this all fails to take into account a much more important negotiation strategy – after all, few protagonists will get to negotiate with the President himself, and fewer still with him on his own. A far smarter negotiation strategy is therefore to engage in intensive negotiations with anyone but Trump himself. For instance, the German government team has done this admirably from the outset: Ministers Sigmar Gabriel and Ursula von der Leyen – to take just two examples – were very quick to enter into a dialog with their respective counterparts. It is important to note that, with Trump, everything does not hinge on on-the-nose negotiation showdowns like with hostage-takers or car salesmen. What is needed instead are intelligently structured and timed negotiation campaigns based on careful stakeholder analyses.

One example of a smart move in such an overall campaign is the invitation of Ivanka Trump to Germany. During chancellor Merkel’s recent visit to Washington, German managers and entrepreneurs were part of her delegation. During a talk about the German educational system (i.e. the dual vocational training), they extended an invitation to the daughter and therefore a highly influential advisor of President Trump to visit educational centers in Germany.

In complex negotiations, substance is key

Another example that highlights the importance of negotiation skills beyond the obvious ones was provided by the President himself in the days when he tried to gain support for his health care bill. He is said to have used a lot of pressure in the form of coercive power (threats of punishment). That this hardball-type dealmaking behavior is not sufficient was underscored by recent comments from aides who described the President as not particularly knowledgable about health care. Knowing about the subject matter is particularly important if the other side cannot simply be swayed into accepting a deal. In complex negotiations, substance is key.

Professor Dr. Lutz Kaufmann
Chair of International Business and Supply Chain Management at WHU – Otto Beisheim School of Management.
Academic Director of WHU‘s Negotiations Program for Executives

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Trends in the private equity sector in 2017

Interview with WHU-Professor Garen Markarian

Private equity is one of the most modern investment tools available, with a history of less than 30 years. Essentially, private equity means that a group of high net worth individuals and institutions (such as pension funds), pool together funds and hire a professional management team, that then invests on their behalf.

The rationale: Why put savings with professional equity/bond investors, when you can have much higher returns investing in private companies? The number of companies owned by private equity, globally, exceeds $3b in the latest surveys: anywhere from the Hilton, Formula 1, Hugo Boss, and Hertz are owned by private equity (PE).

We interviewed Professor Garen Markarian, who teaches in WHU´s “Value Creation in Private Equity & Venture Capital Program”, on recent developments in the private equity sector.

WHU Executive Education: Professor Markarian, you are specialized in financial accounting, corporate finance and private equity. Is the private equity sector stable or do you expect changes? Are there differences in the markets in Germany and the rest of Europe?

Professor Garen Markarian: The last recent years have been a boom period for the wealthy. If there was ever a period where the ”rich are getting richer“ and the ”poor are not getting richer“, then that would be today. Now, without getting into philosophical discussions as to why this has happened, I would like to say that the most recent wealth accumulation by rich individuals and organizations, has led to a massive boom for the PE industry. The PE activity now has exceeded that of 2007, with more and more funds going into southern European countries, and east all the way to the Russian frontier.

WHU Executive Education: What are top issues for the private equity sector in 2017?

Professor Garen Markarian: Well, having boom times has its drawbacks. When there is too much money floating around, things become expensive. The wise person would invest extremely careful in today’s inflated valuations. Nevertheless, we still see a lot of money flowing in, and you suspect that a lot of these investments are not justified by their fundamentals. If I were to predict, we will witness a lot more bankruptcies five years on from today, because some investments were done over-exuberantly today. Greed – we know its consequences.

WHU Executive Education: What would you recommend to PE companies to be prepared for in 2017?

Professor Garen Markarian: More investments into South America, Africa, and the western part of Asia. There are strong headwinds in Europe and the USA, and if I were to be a pessimist, I would worry about the negative political fallbacks from European politics, combined with poor policy making in the USA.

WHU Executive Education: Thank you very much, Professor Markarian!


Would you like to improve your knowledge in private equity?

Learn more about WHU´s Value Creation in Private Equity & Venture Capital Program for managers: (LINK)


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WHU Certified In Programs – FAQ

Since December 2016, WHU Executive Education offers a new program format: The Certified In Programs.

We have compiled Frequently Asked Questions for you:

What is a “WHU Certified In Program”?
WHU Certified In Programs are short courses on MBA level specializing in management topics. Upon successful completion of a “WHU Certified In Program”, participants will be awarded a WHU certificate with 8 ECTS which are valid when pursuing an MBA at WHU.

What is the target group of WHU´s Certified In Programs?
The Certified In Programs are targeted at young managers who have gained 2-5 years of professional experience in various sectors. They are specially designed for professionals interested in certain parts of an MBA, or those who do not have the time or resources to attend a full MBA program.

Which topics do the WHU Certified In Programs cover?
There are 3 different WHU Certified In Programs: Finance & Accounting Program, Strategy & Organization Program, Marketing & Sales Program. Each program consists of 4 or 5 courses, which you can find on our website.

What is the format of the WHU Certified In Programs?
Every WHU Certified in Program consists of 4 courses. Some Programs offer 5 courses of which 4 are selected on enrolment. Each course comprises 3 days of teaching and is held only on Saturdays and Sundays. To receive a certification with 8 ECTS credits, you are bound to one of the named “WHU Certified in Programs” and participate fully in all 4 four courses and pass an exam at the end of the courses.

It is also possible to participate in just one course or several courses different from the offered WHU Certified in Programs.

When do the WHU Certified In Programs take place?
Program dates are updated regularly and will be published on the respective website. Courses are held on Saturdays and Sundays.

What is the program / course language?
All courses will be held in English.

Where do the WHU Certified In Programs take place?
The WHU Certified In Programs take place at WHU Campus Düsseldorf, Germany.

Do I get a Certificate of Attendance?
Yes. A Certificate of Participation will be granted for every taken course. ECTS credits will be awarded only upon successful completion of a WHU Certified Program (including participation in 4 courses and passed exams).

What are the fees for the WHU Certified In Programs?
Full ‘WHU Certified In Program’ (4 courses; accredited):
€5,000 including tuition, Certificate (incl. ECTS credits), session materials, case studies, and most meals; excluding accommodation.

Single courses (non-accredited):
€1,500 including tuition, Certificate of Participation (excl. ECTS credits), session materials, case studies, and most meals; excluding accommodation.

Our program fees are VAT-exempt.

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A way of negotiating: Football leaks – never waste a scandal

Corporations are continuously faced with high levels of uncertainty from numerous sources and are always looking for ways to deal with this issue. Besides uncovering questionable practices in the world of football, Football Leaks has also provided a unique perspective into the way football clubs and players negotiate contingent contracts to deal with uncertainty. Only in their case, uncertainty does not stem from changing raw material prices, volatile markets, fluctuating exchange rates, natural disasters, or simply different views on how a business is going to develop. Instead, players, their agents, and the clubs protect themselves from uncertainties revolving around the future development, performance, behavior, and movement of players.

One of the biggest uncertainties of player transfers in football revolves around the future development of young players. In some cases they exceed expectations, in others they fall short of what the buying club had hoped for. Especially with the skyrocketing prices of talented players, misjudging a player’s potential can be incredibly costly. The transfer of French striker Anthony Martial from AS Monaco to Manchester United is a great example of how football clubs deal with this issue. In addition to a base fee of €50 million for the at the time 19-year-old, the two clubs also agreed on a number of contingencies. Manchester United agreed to pay up to €30 million contingent on the number of goals scored by Martial, his national team appearances and whether he is nominated for the Ballon D’Or. Besides the reduction of risk on both sides, this arrangement also removes the necessity to convince the other side of your future expectations in order to strike a deal.

An example of dealing with uncertainty from the player’s perspective was the deal between German player Kevin Volland and his club at the time 1899 Hoffenheim in 2015. In his contract, they included a clause that allowed Volland to transfer to another club for a fixed fee of €7.5 million in the case that Hoffenheim get relegated to the 2. Bundesliga (Germany’s second highest division in professional football). That way, Volland protected himself from having to stay at the club in case of relegation and was willing to sign a long-term contract until 2019.

The Football Leaks have also uncovered very specific and sometimes even seemingly obscure contingencies. When the Italian player Mario Balotelli transferred to Liverpool FC, he was known for his eccentric behavior on and off the football pitch. In order to protect themselves from his antics, Liverpool decided to include a good conduct clause in Balotelli’s contract. This clause ensured that he received a bonus payment of £1 million for not spitting at opponents or engaging in violent conduct on the pitch.

Other contingent agreements are in place to prevent the competition from getting hold of certain players. For example, when Real Madrid sold Mesut Özil to Arsenal FC they secured a special clause in the negotiation. If Arsenal intends to accept an offer for Özil from another Spanish football club, they have to inform Real Madrid about the details of that offer and then Madrid has the opportunity to buy Özil instead at the exact same conditions as the other offer. That way, Real Madrid can take action and interfere in case any of their rival clubs might attempt to strengthen their team by assigning Özil.

These agreements show the power of negotiating contingent agreements once they have been widely accepted as an industry standard. They reduce the threat of uncertainty, eliminate the need to find common ground on predictions of an uncertain future, create value at the negotiation table, and facilitate deals that would otherwise not be possible. It is important that managers realize the value of using contingencies in negotiations and overcome the typical internal resistance against these deals which are often unfortunately seen as too complex or interpreted as some form of gambling.

Author:

Professor Dr. Lutz Kaufmann
Chair of International Business and Supply Chain Management
at WHU – Otto Beisheim School of Management,
Academic Director WHU‘s Negotiations Program

Would you like to train your negotiation skills? Learn about our Negotiations Program

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