FINANCE FOR GROWTH AND FOR ENTREPRENEURIAL RISK MANAGEMENT

The course deal with the main financial problems that affect the small and medium enterprises, particularly for the capital rationing difficulties they must confront in growing processes (being them quantitative or qualitative). Such a capital rationing is partly due to the specific risk profile that affect these particular corporations (i.e. payoff risk) and partly due to the disclosure processes that characterize the SME in financial communication processes (i.e. information risk).
Dealing growing finance transaction in a correct way requires as first to clarity the final aim and scope of corporate activity and its targets. From that point the feasibility study must be conducted in a ?flash-back-approach? (i.e. from future to present); thus, a very different technique from the typical financial planning activities that move from present corporate conditions to project them in the future (i.e. forward-looking-approach).
A key aspect of finance for corporate growth is the deep analysis of return expectations and risk embedded into them, in order to access the actual opportunities and capabilities that the corporation can access to manage corporate risks, developing excess returns and keep a strong competitive advantage in the long run. To access this goal, the course focuses over a set of tools to carry on financial analysis and to support managerial decisions, particularly those affecting the capital structure such as: the debt-to-equity ratio; the debt maturity; all the non-equity agreements and covenants supporting the financial transaction and reducing information asymmetries; the legal and tax profile of the specific funding transaction; the capital allowances analysis.

Students will acquire the key theoretical elements underlying the corporate financing of growing opportunities. Special focus will be based on theoretical models concerning (i) the debt-to-equity ratio of growing companies, (ii) the consequent possibility to benefit a tax-shield due to leverage, (iii) the contribution of the debt maturity choices to fund the corporate growth, (iv) the relation between corporate risk and growing opportunities.
Attendance of classes will permit to acquire the most diffused financial practices concerning the financing of company growth. Particularly, the focus will be based on how to develop concrete modelling of free cash flows, the presentation of a plan deploying opportunities for investors along with the legal profiles of financing which fit with the specific case of growth. Some insiders will be given in projecting the financial deal to sustain the corporate growth by recurring to covenants and other clauses.

Corporate Finance, Business Economics and Management

Five topics will be dealt with the course on a weekly basis.
1. Financial planning and analysis of corporate growth: ?back-to-the-future? from current constraints
2. Risk mapping and management in a enterprise wide approach: how to extract value from corporate risks and transform threats in opportunities using a wise-finance view
3. Valuing growing enterprises: how to discover the potential value of the proposed growing path
4. Submitting the return-to-risk profile to the investors: how to deal funding transactions and avoid to pay excess risk premia due to information lack (business planning)
5. Optimal financial policies for growing corporation vs. standard financial policies.

Benninga, S. Financial Modelling, 2nd Ed. McGraw-Hill, 2010
Leach, J. C., & Melicher, R. W. (2020). Entrepreneurial Finance. Cengage Learning.

The final grade will typically be based on a written examination. The written exam will consist of multiple-choice questions (MCQs) and two to three open-ended questions to be answered in English within 60 minutes. Some questions may require numerical examples as part of the answer.

Active participation in class is expected, including engagement in discussions and class quizzes, which will also be considered in the final evaluation.

Students will be required to complete a group project and present their findings. During the presentation, each student must clearly highlight their individual contribution to the project. The final grade will take into account both theoretical and practical knowledge, as well as the ability to communicate that knowledge effectively.

written

The grading system (how the grades will be assigned) is the same for attending or non-attending students:
A. scores in the 18-22 range will be awarded in the presence of:
- sufficient knowledge and ability to understand applied in relation to the programme;
- sufficient ability to apply knowledge and understanding and judgment;
- sufficient communication skills, especially in relation to the use of specific language relating to the subject;
B. scores in the 23-26 range will be awarded in the presence of:
- good knowledge and ability to understand applied in relation to the programme;
- good ability to apply knowledge and understanding and judgement;
- good communication skills, especially in relation to the use of specific language relating to the subject;
C. scores in the 27-30 range will be awarded in the presence of:
- excellent knowledge and ability to understand applied in relation to the programme;
- excellent ability to apply knowledge and understanding and judgment;
- excellent communication skills, especially in relation to the use of specific language relating to the subject.

Classes are based on a six hours weekly programme for a complete cycle of 30 hours of attending during the five weeks course period. Each week course is dedicated to one of the subjects as highlighted in the contents section
All the classes are based on a very practical approach thus widely using cases and real corporate experience but without offending sound scientific framework. Classes will be thus developed in a typical business-school approach. During each weekly cycle lessons will be intended to
- the former, to give a complete theoretical framework
- the second, to highlight the inner difficulties in practical application and practice
- the latter, to discuss a real case
Classes requires a strong relationship with the attendants that could be encouraged by the joint attendance of classes by guest attendants from real corporation, professional and financial intermediaries. Attendants are thus suggested to read in advance the readings for the specific lessons according to the analytical syllabus that will be available a few days before classes begin.