Student guide Faculty of Law A.Y. 2008/09

The Economics of Groups, Concentrations and Cooperative Ventures
Aim of the course
The Economics of Groups, Concentrations and Cooperative Ventures course is designed as the natural completion of the economics/business subjects taught in earlier courses. The aim is to analyse the economic aspects underlying the subjects commonly encountered by company lawyers.
The course will first deal with the subject of company solvency, presenting a suitable model for evaluating the soundness of a company by means of financial analysis based on tools which are well established in theory and practice.
Subjects relating to extraordinary operations will also be covered. These subjects are included in the course to enable students to analyse the more strictly economic aspects of operations they are already familiar with in legal terms. In order to provide a valuation perspective suitable to analyse (inter alia) the external growth operations already illustrated in the strategy course, some of the main methods that can be used to evaluate the economic capital of a company will be presented. Market-based valuation methods such as the comparable transactions, stock exchange prices and multiples methods will also be briefly presented.

1. Analysis of annual accounts for the purpose of evaluating a company's state of health.
1.1 The concept of insolvency (s. 5, Royal Decree no. 267 of 16 March 1942 – Bankruptcy Act).
1.2 Reclassification of the Profit and Loss Account and Balance Sheet for the purpose of evaluating the economic/financial balance of a company.
1.3 The accounting indicators which should be used in the process of economic/financial analysis.

2. Extraordinary operations.
2.1 Assignment.
2.2 Contribution to capital (ss. 2342 - 2343-bis and 2476 of the Civil Code.).
2.3 Merger.
2.3.1 Takeover (ss. 2501, 2501-ter et seq. of the Civil Code).
2.3.2 Merger after acquisition with loan (s. 2501-bis of the Civil Code).
2.4 Demerger.

3. Value, and application issues.
3.1 The concept of economic value versus price.
3.2 Methods of valuation of economic capital.
3.3 Economic value in the ambit of extraordinary operations.
3.4 The value of economic capital in the event of exercise of the right of withdrawal (s. 2437-ter of the Civil Code), option rights (s. 2441.6 of the Civil Code), and takeover bids (s. 102 et seq. of the Consolidated Finance Act).
3.5 Valuations expressed by the stock market: criteria and use of the results.

An oral exam on the entire syllabus will be held at the end of the lectures.

Reading list
Reboa, M., Fornara, E., (lecture notes), Economia dei gruppi, delle concentrazioni e delle cooperazioni aziendali, Guerini, Milan, 2004.

Garegnani, G. M., Perotta, R., Extract from Le operazioni di gestione straordinaria, Giuffrè, Milan, 2001.