Finance 562, known as “Advanced Corporate Finance,” is a cornerstone course within Stanford’s Graduate School of Business (GSB) finance curriculum. It delves far deeper than introductory courses, providing students with a rigorous and nuanced understanding of complex corporate finance issues. The course is generally taken by MBA students concentrating in finance, and often serves as a springboard for careers in investment banking, private equity, hedge funds, and corporate strategy.
The core focus of Finance 562 is on advanced topics like mergers and acquisitions (M&A), leveraged buyouts (LBOs), restructurings, and complex capital structure decisions. Students are expected to possess a strong foundation in basic corporate finance principles before entering the course, including valuation techniques, financial statement analysis, and capital budgeting. The course builds upon this foundation by introducing sophisticated models, theoretical frameworks, and real-world case studies.
A significant portion of the curriculum is dedicated to understanding M&A transactions. Students analyze the motivations behind mergers, the valuation methodologies used to determine deal prices, and the strategies employed to integrate acquired companies. They learn to assess the risks and rewards associated with different types of mergers, including horizontal, vertical, and conglomerate mergers. The course explores various deal structures, such as all-stock deals, cash-and-stock deals, and leveraged acquisitions.
LBOs receive substantial attention, with students dissecting the financial engineering involved in these transactions. They learn how to build complex financial models to assess the feasibility of LBOs, considering factors such as debt capacity, cash flow projections, and exit strategies. The course also examines the role of private equity firms in LBOs and the potential impact of these transactions on target companies.
Another crucial area covered is corporate restructuring, focusing on situations where companies face financial distress or operational challenges. Students analyze various restructuring options, including debt restructuring, asset sales, and bankruptcy. They learn to evaluate the interests of different stakeholders, such as creditors, shareholders, and employees, and to develop strategies to maximize value in distressed situations.
Finance 562 is heavily case-based, requiring students to actively participate in class discussions and present their analyses of complex financial scenarios. The case studies often involve real-world transactions, allowing students to apply the theoretical concepts they have learned to practical situations. This hands-on approach helps students develop critical thinking skills and decision-making abilities, preparing them for the challenges they will face in their future careers.
Beyond the core curriculum, the course often features guest speakers from leading investment banks and private equity firms. These speakers provide valuable insights into current market trends and the practical application of corporate finance principles in the real world. The demanding nature of Finance 562 combined with its practical focus and network opportunities makes it a highly valuable course for students aiming for careers in high finance.