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Case
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Reference no. 395-070-1
Published by: London Business School
Published in: 1995
Length: 22 pages
Data source: Field research

Abstract

A venture capitalist has funded an Italian free advertisement newspaper business in syndicate with the original owners of two companies acquired to form the new business. The original intention was to grow the company through further acquisitions, but board disputes, the actions of the managing director and the shareholders'' agreement have combined to stall the strategy. Furthermore, the terms of an earn-out, together with uneven trading performances in different parts of the business and lax controls on discretionary spending, have put the business in a tight cash position as regards fulfilling outstanding deferred acquisition payments. The case focuses on the deal structure and the problems of aligning the objectives of different parties to implement a successful strategy. What course should the venture capitalist now adopt to maximise his investment return?
Location:
Industry:
Other setting(s):
1989-1991

About

Abstract

A venture capitalist has funded an Italian free advertisement newspaper business in syndicate with the original owners of two companies acquired to form the new business. The original intention was to grow the company through further acquisitions, but board disputes, the actions of the managing director and the shareholders'' agreement have combined to stall the strategy. Furthermore, the terms of an earn-out, together with uneven trading performances in different parts of the business and lax controls on discretionary spending, have put the business in a tight cash position as regards fulfilling outstanding deferred acquisition payments. The case focuses on the deal structure and the problems of aligning the objectives of different parties to implement a successful strategy. What course should the venture capitalist now adopt to maximise his investment return?

Settings

Location:
Industry:
Other setting(s):
1989-1991

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