Berkshire Partners: Bidding for Carter’s Essay

723 Words Jan 29th, 2013 3 Pages
Corporate Valuation
Berkshire Partners: Bidding for Carter’s

1. Berkshire brought expertise in finding the right financing structure and operational and strategy related to the retail and manufacturing industry. Berkshire managers believed that the equity portion of a capital structure should be at least 25% to order to achieve the desired results as far as return and to show true commitment to the lending base. When determining the capital structure, they also seriously took into account such questions as: Is this the appropriate amount of leverage for a business of this type; what do the rating look like; how difficult will it be to get financing and what about financing costs?
Once Berkshire had taken an
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Ultimately, Berkshire used “internal and external resources to undertake a thorough planning process that both built a road map to guide management's operating execution, but also served to coalesce the team around the significant potential inherent in the opportunities ahead of their company.”
2. Berkshire had developed a focus on “building strong, growth oriented companies in conjunction with strong equity incented management teams.” Carter’s was definitely financially strong as mentioned in the last question and growth orientated, as they recently diversified into the discount market for baby and young children’s apparel and were looking to move into the two to six year old playwear segments . They had shown success in a competitive, non-seasonal industry. Carter’s management team was disciplined and working to increase operating efficiencies by shortening development cycle and aiming to use 100% offshore sourcing in the near future. Management was also set on building on relationships with major customers (top eight wholesale customers represented 74% of wholesale revenue), and to continue to build profitable retail outlet stores. Berkshire liked the fact that Carter’s was a strong recognizable brand that could be leveraged across multiple channels and be viewed as a consumer products company. The only problem could be that Goldman Sachs was using a staple on financing structure. Berkshire felt this structure limited

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