M&A Challenge

What remains the only national M&A Case Study competition will be held on the 3rd of December, 2011, at London offices. The game is structured around an analyst’s work in the Investment Banking Division and seeks to provide participants with hands on experience of considering key issues when bringing two firms together to form a new business entity. 
The competition ends with the presentation of pitches to a panel of judges, including investment bankers from our sponsoring firms. Participants are assessed on their ability to work in a team, support their arguments using quantitative and qualitative tools as well as their ability to collate and articulate ideas under time constraint. The panel will award a First Prize of 1500 GBP to the winner and 500 GBP to the runner up.
The day will be concluded by a relaxing catered networking reception with representatives from our sponsors and fellow participants.
The case study is as follows:

• Your team will serve as Finance Advisor to the Reckitt Benckiser, the UK-based global consumer goods company
• You are requested to:
• Evaluate the performance, strategy and competitive position of your client whilst taking into account the risks and opportunities present in the firm’s industry
• Choose for your client a potential target
• Carry out your own research into publicly available sources of information to address and subsequently present to your client why you advise this deal in a PowerPoint presentation:

Presentations:

• Your team will be given information regarding the acquiring firm:
• Overview of the Industry
• Overview of Recent Transactions
• Overview of Reckitt Benckiser – the acquiring firm
• Your team is expected to come up with your own target recommendation and to carry out research to support you recommendation
• Your presentation should include the following:
• Industry overview;
• Overview of Acquirer;
• Overview of Target;
• Valuation of Target: You may use DCF, precedent transaction analysis and comparable multiple analysis or a combination thereof to determine the value of the target and how much you would advise your client to pay
• Method of financing the transaction: 50% debt and 50% equity? Or something completely different?
• Strategic Analysis / Deal Rationale

Agenda for the Day of the Challenge:

The UIBS Trading Challenge will take place on the 12th of November 2011, at Imperial College, London. The first of its kind, the game recreates a day’s experience on the trading floor where 20 teams of aspiring Hedge Fund and Investment Bank traders compete to make the most profit or to earn the most in commission. The teams have the following structure:
10 Hedge Funds:
Winner makes the most profit

• Trader 1
• Trader 2
• Structurer
• Researcher
• PM

10 Investment Banks:
Winner makes the most income from commission and spread

• Trader 1
• Trader 2
• Sales Trader 1
• Sales Trader 2
• Researcher 

Teams are given research reports and time in the morning to formulate their strategies for the day. They have to respond to developments as news unravelled and make decisions to trade the 5 stocks and 3 derivatives products in the market. Teams are awarded based on their performances. In addition to the winning criteria outlined above, the team that outperformed the sector the most was named Overall Winner of the competition. Every participant will also take home a team performance overview: a document, which will include essential performance metrics, used in Investment Banks to measure performance. The day ended with a networking reception with recruiters from our Partners, Sponsors and fellow participants. 
 Sample Scenario:

• HF Researcher finds interesting information and would like to short VOD
• After consulting PM, PM decides to hedge by going long FTSE calls
• Strategist works out ratio to hedge and tells trader to sell 50 000 VOD and buy 100 FTSE call contracts
• Trader calls IB sales trader who then asks the cash and derivatives traders for prices
• Both traders consult ‘natural flow’ spreadsheets
• Cash trader: no natural bids for VOD and has to do a ‘risk trade’ by selling into the market and buying from clients, giving a bid price based on judgement
• Derivatives trader: has natural bids and offers the contracts, takes no risks and earns a commission
• Trade completed
• IB researcher finds information that HF researcher does not have and gets the sales trader to call and give advice on buying or selling certain securities