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Case | HBS Case Collection | March 2013 (Revised July 2014)

Bay Partners (A)

by Josh Lerner and Lauren Barley

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Abstract

In April 2010, Salil Deshpande has recently resigned from Palo Alto, California-based Bay Partners (Bay) where he had been a general partner. Although Deshpande had built a successful track record at the venture firm, he resigned with two other Bay general partners as disagreement about internal economics and governance continued among the Bay's six-member management team. This triggered the "key man" clause in the limited partnership agreement of Bay's most recent fund, Bay XI. The case considers the options that Deshpande and the Bay XI limited partners face as the firm and fund's futures are thrown into doubt.

Keywords: Risk and Uncertainty; Risk Management; Venture Capital; Conflict Management; Partners and Partnerships; Resignation and Termination; Policy; Management Teams; Financial Services Industry; California;

Language: English Format: Print 12 pages EducatorsPurchase

Citation:

Lerner, Josh, and Lauren Barley. "Bay Partners (A)." Harvard Business School Case 213-102, March 2013. (Revised July 2014.)

Related Work

  1. Supplement | HBS Case Collection | March 2013 (Revised July 2014)

    Bay Partners (B)

    Josh Lerner and Lauren Barley

    In December 2012, Salil Deshpande has rejoined Bay Partners (Bay), which had been restructured following the 2010 departures of three of its general partners. Life was good for Deshpande: his firm had distributed roughly $1 billion to its limited partners (LPs) over the past 18 months as four of its portfolio companies filed for IPOs and four more were acquired; several of Bay's exits through acquisitions were from Deshpande's seed investments; Bay's LPs were ecstatic with Bay's turnaround; and the office atmosphere was upbeat and fun. Now was a logical time to begin fundraising for the next fund, Bay XII. Although several Bay XI LPs were encouraging Deshpande to raise a new fund under the Bay Partners' banner, Deshpande wondered if that was realistic, and even desirable, given the firm's tumultuous history over the last seven years. Other Bay XI LPs and some other potential investors were urging Deshpande to raise a smaller, solo fund. Recruiters and venture firms also regularly contacted Deshpande "to see where his head was at."

    Keywords: Decision Choices and Conditions; Investment Funds; Growth and Development Strategy; Financial Services Industry;

    Citation:

    Lerner, Josh, and Lauren Barley. "Bay Partners (B)." Harvard Business School Supplement 213-103, March 2013. (Revised July 2014.)  View Details
    CiteView DetailsPurchase Related
  2. Case | HBS Case Collection | October 2013

    Bay Partners (B) (Abridged)

    Josh Lerner and Matthew Rhodes-Kropf

    Abridged supplement for case 213102, for instructors who wish to have students review in class.

    Citation:

    Lerner, Josh, and Matthew Rhodes-Kropf. "Bay Partners (B) (Abridged)." Harvard Business School Case 214-042, October 2013.  View Details
    CiteView DetailsEducatorsPurchase Related
  3. Case | HBS Case Collection | March 2013 (Revised July 2014)

    Bay Partners (A)

    Josh Lerner and Lauren Barley

    In April 2010, Salil Deshpande has recently resigned from Palo Alto, California-based Bay Partners (Bay) where he had been a general partner. Although Deshpande had built a successful track record at the venture firm, he resigned with two other Bay general partners as disagreement about internal economics and governance continued among the Bay's six-member management team. This triggered the "key man" clause in the limited partnership agreement of Bay's most recent fund, Bay XI. The case considers the options that Deshpande and the Bay XI limited partners face as the firm and fund's futures are thrown into doubt.

    Keywords: Risk and Uncertainty; Risk Management; Venture Capital; Conflict Management; Partners and Partnerships; Resignation and Termination; Policy; Management Teams; Financial Services Industry; California;

    Citation:

    Lerner, Josh, and Lauren Barley. "Bay Partners (A)." Harvard Business School Case 213-102, March 2013. (Revised July 2014.)  View Details
    CiteView DetailsEducatorsPurchase Related

About the Author

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Josh Lerner
Jacob H. Schiff Professor of Investment Banking
Unit Head, Entrepreneurial Management
Entrepreneurial Management
Finance

View Profile »
View Publications »

 

More from the Author

  • Working Paper | HBS Working Paper Series | 2018

    Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad

    Steven J. Davis, John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner and Javier Miranda

    Ayash and Rastad (2017) express several concerns about our 2014 analysis of private equity buyouts. We welcome their interest in our work but think their criticisms are off the mark. Some of their claims reflect a misunderstanding of the Census Bureau’s Longitudinal Business Database (LBD) and its underlying data inputs. Because the LBD has emerged as a major laboratory for empirical studies in economics and finance, we use this opportunity to reiterate and clarify some of its important features. In a similar spirit, we elaborate on steps taken to develop our large sample of private equity buyouts. We also address Ayash and Rastad’s remarks about the empirical design of our establishment-level analysis, our methods for distinguishing between leveraged buyouts (LBOs) and other private equity transactions, bankruptcy rates among firms acquired in LBOs, their assertion that we undercount large public-to-private LBOs, and other matters.

    Keywords: Private Equity; Leveraged Buyouts; Jobs and Positions; Performance Productivity;

    Citation:

    Davis, Steven J., John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner, and Javier Miranda. "Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad." Harvard Business School Working Paper, No. 18-074, January 2018.  View Details
    CiteView DetailsSSRN Read Now Related
  • Article | Journal of Financial Economics | January 2018

    The Globalization of Angel Investments: Evidence Across Countries

    Josh Lerner, Antoinette Schoar, Stanislav Sokolinski and Karen Wilson

    This paper examines investments made by 13 angel groups across 21 countries. We compare applicants just above and below the funding cutoff and find that these angel investors have a positive impact on the growth, performance, and survival of firms as well as their follow-on fundraising. The positive impact of angel financing is independent of the level of venture activity and entrepreneur friendliness in the country. However, we find that the development stage and maturity of startups that apply for angel funding (and those that are ultimately funded) is inversely correlated with the entrepreneurship friendliness of the country, which may reflect self-censoring by very early stage firms that do not expect to receive funding in these environments.

    Keywords: Entrepreneurship; Globalization; Investment; Business Startups;

    Citation:

    Lerner, Josh, Antoinette Schoar, Stanislav Sokolinski, and Karen Wilson. "The Globalization of Angel Investments: Evidence Across Countries." Journal of Financial Economics 127, no. 1 (January 2018): 1–20.  View Details
    CiteView DetailsFind at Harvard Related
  • Teaching Note | HBS Case Collection | December 2017

    KKR, Ringier Digital, and the Acquisition of Scout24 Switzerland

    Josh Lerner

    Teaching Note for HBS No. 816-059.

    Citation:

    Lerner, Josh. "KKR, Ringier Digital, and the Acquisition of Scout24 Switzerland." Harvard Business School Teaching Note 818-085, December 2017.  View Details
    CiteView DetailsPurchase Related
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