Case | HBS Case Collection | January 2004

Bob Holgrom and the Buyout of the Carlson Division

by Thomas R. Piper

Abstract

The head of the Carlson Division stands to benefit substantially in financial terms if a private equity firm wins the bid for the division. The division is in the early stages of a performance turnaround, with only three quarters of profit improvement and no audited figures. The division head has a well-developed plan to improve performance and is confident that operating profits will double within five years. If this occurs and if the private equity firm is successful in buying the division at its target price, the division head's equity interest may be worth $60 million in five years. How much should he disclose to strategic buyers and to the parent company in terms of the turnaround plans and prospects? What are the legal and ethical requirements?

Keywords: Private Equity; Leveraged Buyouts; Corporate Disclosure; Ethics; Financial Reporting; Laws and Statutes; Performance Improvement;

Citation:

Piper, Thomas R. "Bob Holgrom and the Buyout of the Carlson Division." Harvard Business School Case 304-083, January 2004.