Case | HBS Case Collection | December 2002 (Revised June 2003)

Vignette: The Rebar Dilemma

by G. Felda Hardymon, Josh Lerner and Ann Leamon

Abstract

Martin Smith, a new associate at an LBO firm, must respond to a problem posed by his boss, based on an historical deal that suddenly came undone. After months of negotiation, his firm's plan to buy a bankrupt competitor of one of its portfolio companies and close it down, thus reducing capacity, was ready for board approval. Recently, not only has the market for the product improved, but management of the target firm has presented a more attractive deal to recapitalize the company. This would have disastrous results for the entire industry by perpetuating an overcapacity problem. Discusses Smith suggestions.

Keywords: Leveraged Buyouts; Insolvency and Bankruptcy; Competition; Growth and Development Strategy; Business or Company Management;

Citation:

Hardymon, G. Felda, Josh Lerner, and Ann Leamon. "Vignette: The Rebar Dilemma." Harvard Business School Case 803-091, December 2002. (Revised June 2003.)