Can we improve the speed and accuracy of vaccine development, while also increasing access to life saving drugs? Can we identify and support promising new start ups without relying heavily on certain exclusive social networks? Can we change companies through strategic acquisitions in ways that not only promote shareholder value but also protect stakeholder interests? Can we finance the development of housing that is both affordable and sustainable?
In this course, we will be answering those questions, among others, by connecting transactional design to some of the most pressing social problems we face today.
The course is organized around three fundamental questions:
How can the design of a given transaction maximize the parties' joint surplus (i.e., the economic goals they are trying to achieve)?
How can the design of a given transaction maximize positive spillovers for third parties and minimize negative spillovers?
How can the design of a given transaction equitably distribute those positive and negative spillovers across third parties?
Of course, those questions are related, and strategies for one may complement or conflict with those for others. In short, trying to optimize across all three is one way to understand the basic policy challenge we encounter in a number of contexts.
Through a gentle introduction to the relevant theory that unpacks those questions, students will be given a conceptual toolkit for designing transactions that they can use across market domains. Students will then be immersed in a series of "deal autopsies," ranging from M&A to venture capital to R&D alliances, that allows them to apply their new tools to real world problems. When available, the practitioners who designed the deals that are studied in our autopsies will join the class to share their view from the trenches.
The course is 3 credits. Substantial writing credit is also available.
Students who successfully complete this course will be able to:
Apply a uniform analytical framework to the design of corporate transactions.
Compare and contrast the distinctive features of deals from market to market.
Interpret and analyze complex agreements.
Examine the effects of deal design on investors and on society as a whole.
Analyze new forms of market infrastructure made possible through social and technological development.
Covid-19
While COVID-19 conditions persist and until further notice, students and faculty are required to wear masks at all times during class; faculty are not at liberty to waive this expectation. Students who feel sick, including exhibiting symptoms commonly associated with COVID-19 (fever; cough; shortness of breath/difficulty breathing; chills; muscle pain; sore throat; new loss of taste or smell; etc.) should not attend class and should work with their instructor to develop a study plan for the duration of the illness.
Preventing Sexual Harassment
In accordance with Title IX of the Education Amendments of 1972, Brigham Young University prohibits unlawful sex discrimination against any participant in its education programs or activities. The university also prohibits sexual harassment-including sexual violence-committed by or against students, university employees, and visitors to campus. As outlined in university policy, sexual harassment, dating violence, domestic violence, sexual assault, and stalking are considered forms of "Sexual Misconduct" prohibited by the university.
University policy requires all university employees in a teaching, managerial, or supervisory role to report all incidents of Sexual Misconduct that come to their attention in any way, including but not limited to face-to-face conversations, a written class assignment or paper, class discussion, email, text, or social media post. Incidents of Sexual Misconduct should be reported to the Title IX Coordinator at t9coordinator@byu.edu or (801) 422-8692. Reports may also be submitted through EthicsPoint at https://titleix.byu.edu/report or 1-888-238-1062 (24-hours a day).
BYU offers confidential resources for those affected by Sexual Misconduct, including the university's Victim Advocate, as well as a number of non-confidential resources and services that may be helpful. Additional information about Title IX, the university's Sexual Misconduct Policy, reporting requirements, and resources can be found at http://titleix.byu.edu or by contacting the university's Title IX Coordinator.
Students with Disabilities
Brigham Young University is committed to providing a working and learning atmosphere that reasonably accommodates qualified persons with disabilities. If you have any disability which may impair your ability to complete this course successfully, please contact the University Accessibility Center (UAC), 2170 WSC or 422-2767. Reasonable academic accommodations are reviewed for all students who have qualified, documented disabilities. The UAC can also assess students for learning, attention, and emotional concerns. Services are coordinated with the student and instructor by the UAC. If you need assistance or if you feel you have been unlawfully discriminated against on the basis of disability, you may seek resolution through established grievance policy and procedures by contacting the Equal Employment Office at 422-5895, D-285 ASB.
Mental Health
Mental health concerns and stressful life events can affect students’ academic performance and quality of life. BYU Counseling and Psychological Services (CAPS, 1500 WSC, 801-422-3035, caps.byu.edu) provides individual, couples, and group counseling, as well as stress management services. These services are confidential and are provided by the university at no cost for full-time students. For general information please visit https://caps.byu.edu; for more immediate concerns please visit http://help.byu.edu.
Deliberation Guidelines
To facilitate productive and open discussions about sensitive topics about which there are differing opinions, members of the BYU community should: (1) Remember that we are each responsible for enabling a productive, respectful dialogue. (2)To enable time for everyone to speak, strive to be concise with your thoughts. (3) Respect all speakers by listening actively. (4) Treat others with the respect that you would like them to treat you with, regardless of your differences. (5) Do not interrupt others. (6) Always try to understand what is being said before you respond. (7) Ask for clarification instead of making assumptions. (8) When countering an idea, or making one initially, demonstrate that you are listening to what is being said by others. Try to validate other positions as you assert your own, which aids in dialogue, versus attack. (9) Under no circumstances should an argument continue out of the classroom when someone does not want it to. Extending these conversations beyond class can be productive, but we must agree to do so respectfully, ethically, and with attention to individuals' requests for confidentiality and discretion. (10) Remember that exposing yourself to different perspectives helps you to evaluate your own beliefs more clearly and learn new information. (11) Remember that just because you do not agree with a person's statements, it does not mean that you cannot get along with that person. (12) Speak with your professor privately if you feel that the classroom environment has become hostile, biased, or intimidating. Adapted from the Deliberation Guidelines published by The Center for Democratic Deliberation. (http://cdd.la.psu.edu/education/The%20CDD%20Deliberation%20Guidelines.pdf/view?searchterm=deliberation%20guidelines)
This class does not have a textbook. Rather, we will focus on analyzing original research and primary materials -- namely, the contractual devices that are used in the deals we study. The materials referenced in the reading assignments below can be found in two places:
From time to time, we will reference publicly available documents that are hosted on the Securities and Exchange Commission's EDGAR database (if you're unfamiliar with EDGAR, now is a good time to look into it). These materials will be linked directly below.
We may also use non-public materials now and then, and those will be found in the class Dropbox folder.
If you'd like an accessible and intuitive introduction to the fundamentals of transactional practice, Jay Mitchell's Picturing Corporate Practice is recommended (though not required for this course).
Building an Analytical Framework
Tuesday, January 4, 2022 | Orientation to the Class, Review of Fundamental Economic Infrastructure, Students' Motivations
Thursday, January 6, 2022 | Introducing the Fundamental Problems of Transactional Engineering
Tuesday, January 11, 2022 | Taking Our Theories Out for a Spin: Green Bonds
Thursday, January 13, 2022 | Transactional Engineering as an Innovation Problem
Tuesday, January 18, 2022 | Research workshop for substantial writing projects (No attendance required for MBA students)
Thursday, January 20, 2022 | Research workshop for substantial writing projects (No attendance required for MBA students)
Financing Innovation
Tuesday, January 25, 2022 | Design Application 1: Financing Feature Films
Thursday, January 27, 2022 | Design Application 1: Financing Feature Films
Tuesday, February 1, 2022 | Design Application 2: Pharmaceutical Development
Thursday, February 3, 2022 | Design Application 2: Pharmaceutical Development
Tuesday, February 8, 2022 | Design Application 2: Covid-19 Vaccine Development
Thursday, February 10, 2022 | Design Application 3: Startup Financing
Tuesday, February 15, 2022 | Design Application 3: Startup Financing
Thursday, February 17, 2022 | Design Application 3: Startup Financing
Tuesday, February 22, 2022 | No class due to law school break
Thursday, February 24, 2022 | No class due to law school break
Engineering Exit Strategies
Tuesday, March 1, 2022 | Design Application 5: Initial Public Offerings
Thursday, March 3, 2022 | Design Application 5: M&A
Tuesday, March 8, 2022 | Design Application 5: M&A
Thursday, March 10, 2022 | Winter Deals Conference, Westgate Resort, Park City, UT
Tuesday, March 15, 2022 | Design Application 5: M&A
Thursday, March 17, 2022 | Design Application 5: M&A
Tuesday, March 22, 2022 | Design Application 5: M&A
Thursday, March 24, 2022 | Design Application 5: Special Purpose Acquisition Companies
Redesigning Market Infrastructure
Tuesday, March 29, 2022 | Introducing Private Market Infrastructure: From Medieval Trading Networks to Microfinance
Thursday, March 31, 2022 | Digitizing Market Infrastructure: Basics of Blockchain
Tuesday, April 5, 2022 | Design Application 6: DeFi
Thursday, April 7, 2022 | Design Application 6: DeFi
This part of the course website provides: (1) high-level summaries of the content covered in a given class period; (2) links to slide decks that are presented in class; (3) assigned readings; and (4) supplemental readings and materials.
In our kick-off class period, we will first situate the course within the adjacent course offerings at the law and business schools. The goal here is to differentiate this course and also show how it complements other offerings.
Substantively, this class period will also establish the fundamentals of market infrastructure, treating the legal and social institutions that support markets, first, as technological tools and, second, as reflecting certain values in society. With that context in mind, the notion of transactional engineering will then have content, most clearly as the exercise of manipulating the legal and social technologies upon which markets rely but also as an often deeply contested endeavor that implicates competing values.
For the median law student, this approach to "deals" will invite them to look beyond the static institutional framework that legal education tends to present and focus instead on the institutional dynamics of change in the economy. For the median MBA student, the effect may just be the opposite: This approach will fill in the institutional details -- or make explicit the "toolkit" -- that are typically taken for granted in our pursuit of entrepreneurship and innovation.
Slide deck: Introduction to Deals
Required materials: N/A
Supplemental materials:
In today's class we introduce some of the classic problems bedeviling transactional engineering. Our focus is primarily on the risks and uncertainties that affect parties ability to maximize the joint surplus that their deals will hopefully produce. The discussion Is largely informal and intuitive, and students interested in familiarizing themselves with the related academic literature are encouraged to explore the supplemental materials below.
Slide deck: The Problems of Transactional Engineering
Materials for In-class Discussion:
Supplemental Materials:
[To come]
We will spend the entire semester deepening our understandings of the theories introduced in the prior class. In today's class, we dip our toes in the water of practice for the first time to see whether we observe evidence of our theories at work. Our subject of inquiry is "green bonds," a relatively new transactional innovation. The goal today is not to execute a deep dive on green bond design but rather to see whether we can readily identify these bonds' key contours using our theoretical framework.
Slide deck: Green Bonds
Required Reading:
Materials for In-Class Discussion:
In today's class, we acknowledge that designing transactions Is often more than just fitting legal technology to client needs. Rather, deals are often produced at scale, which typically requires a certain amount of standardization. Standardized contract terms--or "boilerplate"--often become locked-in or "sticky" in a market, for a variety of reasons that we will explore today. In short, part of transactional engineering is being self-aware of that stickiness and figuring out ways to overcome it.
Slide deck: Transactional Innovation
Required Reading:
Supplemental Materials:
In this week of classes, we take the opportunity to develop substantial writing projects for those students who are pursuing that credit.
Slide decks:
In today's class we will begin studying how technology collaborations are structured, focusing specifically on life sciences alliances. We start with the deal that started it all: The 1978 alliance between Eli Lilly and Genentech for the development of recombinant human insulin. We will use the Eli Lilly/Genentech deal to identify some of the common risks and transactional solutions found in these deals, while also setting the stage for the more complicated transactions that we study in subsequent classes.
Slides: Introduction to Life Sciences Collaborations
Materials for class discussion:
Materials for Analytical Project:
In today's class, we will analyze the deals used to pursue Covid-19 vaccine development in the United States. Part of this exercise will involve a deep dive by student groups on the ATI/Novovax agreement. We will also think about how the transactions in this space compare to Advance Market Commitments, which is an influential approach to thinking about the equity problems that often arise in vaccine development.
Slides: [To come]
Materials for class discussion:
Ruth Levine, Michael Kremer & Alice Albright, Making Markets for Vaccines: Ideas to Action (2005)
Ana Santos Rutschman, The Intellectual Property of Covid-19 (2021)
In these classes, we explore another vehicle for financing Innovation: The venture capital market. We first focus on understanding the role of the venture capital market in the innovation system in the United States. Second, we familiarize ourselves with the key pieces of an exemplary Series A term sheet.
Slides: Introduction to Venture Capital
Materials for class discussion:
In these classes, students will be introduced to the institutional framework for the M&A market.
Slides:
Materials for class discussion:
Deal Matrix v. 16 (final)
Materials for M&A Group Projects:
Here, we focus on a deal innovation that has gained wide popularity In the last two years: The special purpose acquisition company, or "SPAC." In addition to reviewing the typical SPAC structure, we're going to focus our attention on a recent proposal to use a version of SPACs to promote stockholder activism.
Slides: [To come]
Materials for class discussion:
For additional background on SPACs, see:
In today's class, we think more systematically about the basic institutions that provide infrastructure for modern markets. Our focus Is on formal institutions, such as legal rules enforced through courts, and informal institutions, such as social norms enforced through informal sanctions. In either respect, these forms of market infrastructure rely on natural language agreements. A key question for us Is how those two types of institutions interact with one another -- are they substitutes or complements? Today's discussion provides a foundation for the next few classes, which explore the possibility of using blockchain technology to replace or augment some of the legacy natural language infrastructure our markets use.
Slides: [To come]
Materials for class discussion:
Greif, Contract Enforceability and Economic Institutions In Early Trade: The Maghribi Traders' Coalition (1993)
Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations In the Diamond Industry (1992)
Richman, How Community Institutions Create Economic Advantage: Jewish Diamond Merchants In New York (2006)
In this week's classes, we consider the promises and perils of digital contracting, particularly through blockchain technology.
Slides: [To come]
Materials for class discussion:
Cambridge Centre for Alternative Finance, Distributed Ledger Technology Systems: A Conceptual Framework (2018)
Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2009)
Cohney & Hoffman, Transactional Scripts in Contract Stacks, Univ. of Penn., ILE Research Paper No. 20-08 (2020)
Jeremy Sklaroff, Smart Contracting and the Cost of Inflexibility, 166 U. Pa. L. Rev. 263 (2017)
RubyGarage, How to Build an Ethereum Smart Contract for a Blockchain Marketplace (2018)