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Financial Strategy (FS)

Introduction

The aim of this module is to provide broad guidance to answer two key questions:

1. Do I want to do this project; and
2. How will I pay for this project?

It concerns decision making and the financial implications of decisions from the extreme short term to the very long term. The module IS NOT designed to turn participants into corporate financiers but to enable them to understand some key concepts.

In business you need to understand the remit of your finance team; and that remit is not to tell you how to spend your money, but to ensure you have the funding you require to do the projects your company should be doing. In the alternative it should be telling you the financial constraints within which you have to work. The Finance team can give you data to aid your decisions, but your role is to make the decision. This course will aid you with that key skill, and explain to you how your finance team will frame its advice, and the concepts it uses to find the funds for you to do your projects.

Specific parts of the module also deal with introductory concepts concerning company valuation, capital markets (stock exchanges), mergers and acquisitions (including a simulation) and corporate solvency.

Objectives

On successful completion of this module participants will be capable of:

  • Applying the project appraisal techniques introduced in the Financial Analysis and Control Systems module
  • Understanding the element of risk/uncertainty in the range of financial strategies available to a company, and how to measure their effect
  • Appreciating the sources of funds available to a company, and their relevance in financial strategy.
    Contributing to the appraisal of the business alternatives open to a company, including mergers and acquisitions
  • Appreciating the importance of broader issues in financial strategy, including non-financial considerations and secondary effects
  • Understanding that things seldom go to plan, and how to recover by understanding where the issues are most likely to be

Contents

Revision of key and relevant concepts introduced in FACS

  • A revisit of Project Appraisal, but with focus on reviewing and criticising rather than deriving
  • Specific techniques and discussions of making decisions, both financial and non-financial
  • Guidance on preparing effective business cases to get your project sponsored, and to make the project financially effective
  • Understanding the relationship between increased risk and increased potential upside, and methods used to quantify both
  • How risk and reward is dealt with at a macro and micro level in the Capital Markets
  • A discussion on how finance is controlled, and how those controls fail via fraud, corruption and incompetence
  • Using the knowledge gained to derive specific finance types for projects
  • The valuation of companies
  • How to “exit” and how to change, including mergers and acquisitions
  • International considerations, an overview of pitfalls and risk mitigation strategies
  • Mergers and Acquisitions, role-playing a transaction and understanding how to negotiate effectively in such situations, and how to frame the decisions you are making
  • Dealing with post-merger issues and why mergers never seem to deliver the forecast “synergies”
  • Deal structures and litigation when it all goes horribly wrong
  • How to use the knowledge gained in the most effective manner