Corporate Financial Strategy

Objective

This course provides, in 4 double sessions, the essential knowledge of basic corporate finance. The approach is practical, generalist, rigorous but without heavy theorizing. This is basically what is taught in business schools, except that the link is systematically made with the ENSAE course on corporate microeconomics. The course is an extension of the corporate financial strategy course taught in the 2nd year. In practice, it is indispensable for following the more specialized courses offered in the 3rd year curriculum, on M&A, structured finance, private equity, etc.

At the end of the course, the student will have the concepts that will be useful in any job with a strong financial component.

The course visuals, which are quite exhaustive, beyond what will be presented in class, will be given in advance. They are likely to be modified during the course.

The teacher has a long experience as an investment banker, as a financial director and then as a manager of a company in the financial sector.

The knowledge will be tested by a mix of practical group work and a written exam to review the acquired notions.

Planning

1.      Understanding the company

a.       The concept of business risk

b.      The link with the legal forms of the company

c.       A history of capitalism through the notion of risk

d.      Link with the microeconomic formalization of the firm

2.      Evaluating a business project

a.       Recall the basics of financial analysis

b. ... and actuarial calculations on the value of financial securities

c.       Business project and project financing

3.      How does the company finance itself?

a.       How to manage the liquidity of its balance sheet

b.      Credit risk: bankruptcy or default of the company

c.       Is there a good debt/equity mix in the balance sheet?

4.      The company and the financial markets: valuing the company

a.       Valuation by the balance sheet, valuation by the market.

b.      An intuition about the cost of capital

c.       The valuation of equity securities

d.      The problem of company valuation: the different models

e.       The practice of business valuation

References

A useful reference is the textbook used at HEC and available at the library: Finance d'entreprise - Pierre Vernimmen, by Pascal Quiry and Yann Le Fur, 2021.

This textbook does not go further than the proposed course, but does so in over 1,000 pages. Correspondences between the course and the textbook will be given. In fact, having taken the course is a good way to immerse yourself in it. Details and examples abound.