The cases “Tiffany & Co.: The LVMH Proposal” (UVA-F-2012) and “LVMH: The Tiffany Acquisition” (UVA-F-2013) serve as two sides of a merger negotiation exercise set in October 2019. Students are asked to represent either LVMH, the acquirer, or Tiffany & Co. (Tiffany), the target company. This multimedia application allows the instructor to collect and analyze the intermediate and final negotiation results and automatically creates a slide deck for final debrief.
1) To build skill in identifying and quantifying the quantitative and qualitative gains that motivate merger agreements. 2) To reinforce and build student confidence in corporate valuation tools, including discounted cash flow–based valuation and comparable multiples–based valuation associated with stand-alone and with-synergy merger valuations. 3) To illustrate the human behavioral aspects of financial transactions by showcasing that asset prices are negotiated rather than simply calculated. 4) To expose students to negotiation theory, including concepts such as “opening and walkaway prices” and the “zone of potential agreement” (ZOPA).