Case | HBS Case Collection | 2004 (Revised from original 1990 version)

O.M. Scott & Sons Co. Leveraged Buyout

by George P. Baker III and Karen Wruck

Abstract

Documents the organizational changes that took place at O.M. Scott & Sons Co. in response to their leveraged buyout. Provides the opportunity for students to discuss the effects of high leverage on management decision making, and the differences between operating as a small subsidiary of a large conglomerate and as a free-standing company. Focuses on the role of the LBO sponsor in the management of the company, the role of restrictive debt covenants, and the effect of changes in the compensation system at the company.

Keywords: Leveraged Buyouts; Capital Structure; Borrowing and Debt; Organizational Structure; Organizational Change and Adaptation; Management; Business Conglomerates; Cost of Capital; Financial Services Industry;

Citation:

Baker, George P., III, and Karen Wruck. "O.M. Scott & Sons Co. Leveraged Buyout." Harvard Business School Case 190-148, November 2004. (Revised from original March 1990 version.)