Kate Spade Case Essay

634 Words Oct 2nd, 2010 3 Pages
Critical Issue: Which options should Kate Spade take?

As the company has become bigger and its financial results were very strong, the team had begun to feel pressured to take the company next level. One of the team member felt that they were losing their control little by little since they had not ready for handling this issue yet. The team wanted to someone who was experienced and could manage developing team to next level. When Kate Spade was looking for some helps, Kate Spade was faced with offers from number of buyers, and what Kate Spade really needed was strategic help. In March 1998, the team had to think about four offers and decide which option the team should take for its company growth.
Those four offers had important
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Plus this company owned three large manufacturing facilities around New York City, and had wide spread distributions. However, this deal consisted of 30% of in cash up front and an earn-out provision over the next three years for remaining 70%. This was not fair price for the team, because the team would be paid on the valuation only three years period even though that they would work really hard. This was not completely fair to the team.

Solution
In order to make decision, those three factors were very important for Kate Spade not to choose those three options. Those three factors were not appropriate for Kate Spade for growing to next level. The solution here is to take the option D, even though that there was put and call rights which the team member really disagreed it or Brosnahan felt uncomfortable to be in the huge company, there was a great chance to expand Kate Spade. Since this buyer was high-end specialty retailer and it operated its own department store in many states offering many kinds of product lines, it knew how to manage growing the company and already had customers. Kate Spade really needed to go up next level and this company had ability to Kate Spade to take next level, so this company had a perfect spot. Some of the ambiguous questions about this trade like how much control do they want, private label, design, or employee issue, the team can negotiate and discuss about those things with this company.

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