Corporate Finance Journey

By Reita Hutagalung, Global MBA student 2012-2013, Indonesia

It was the week when the rest of France actually had two days off (Fete de la Victoire and Ascension Day) but the brave and spirited Global MBA squadron continued the journey. Those of us taking the Corporate Finance elective came to ESSEC's campus to conquer Corporate Finance taught by Professor Sridhar Arcot. It was quite strange to see the campus so quiet-- it felt like we were free to do anything. The canteen unfortunately was closed as well due to the public holiday, but not to worry; Cezam, the kebab place across from ESSEC stayed open.

When you think of Corporate Finance, many hard things may come into mind. However, Prof. Arcot changed all presumptions. He made Corporate Finance fun for us, though still challenging. In between Miller Modigliani, agency cost, valuations of discounted cash flow, and costs of debt vs. equities, we enjoyed trying to look at matters from the manager’s and shareholders’ point of view and debating the relevant impacts. A very interesting case that we worked on was Iridium; the way the company failed to took off was our debate related to Project Management Financing. Despite the advanced vision and technology that the company tried to achieve, the Iridium case showed how overly optimistic projections and choosing the wrong financing method led to a disastrous bankruptcy filing. Project management financing is intended for long lead projects, high levered, but certain demand at the end of the project, which usually leads to industrial customers.

Well, having done the finance lessons, we didn’t part ways as usual. We headed to Le Colombia, a cafe between ESSEC's campus and the Cergy Préfecture. After an intensive week full of corporate finance, we enjoyed France's spring weather in the good company of friends. Thanks Prof. Arcot, for an enriching yet fun finance week!

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