The Headwaters MB case describes the story of Phil Seefried, a GSB alum who co-founded a boutique investment bank, Headwaters MB, in 2001 to serve the middle market business sector. Seefried’s journey growing and managing the bank takes him on a roller coaster ride of success through to the challenging impacts of the 2007/2008 financial crisis, which includes more than one round of layoffs within his small Denver-based company. Over the course of three vignettes, students are exposed to some of the more difficult situations Seefried must navigate. In the first vignette, Seefried learns that one of his most trusted, young managing directors (MD) has accidentally gotten access to the 2005 year-end bonus spreadsheet. Not only is the information highly sensitive, Seefried learns that the MD has been spreading rumors that Seefried is a liar based on information in the spreadsheet, and Seefried is faced with determining how to best deal with the situation so as to preserve his integrity and stability within the firm. In a second vignette, a key banker has decided to leave the company and takes two junior bankers with him, and students are asked how they should communicate the news to employees. Finally, it is the depths of the financial crisis and Seefried needs to conduct layoffs and cut salaries and bonuses across the board. He wants to get the buy-in of two of his top bankers before making the company-wide announcement, but he must craft the message in such a way as to compel them to stay amidst a bleak environment.
The learning objective of the case is to put students in the role of Seefried as he navigates several challenging conversations and decisions. For example, should he terminate the young MD who is spreading rumors to set a precedent for behavior, or will that cause too much upheaval within the company? And how should he communicate to the rest of the company after the bonus spreadsheet has gotten out? In the case where a top banker decides to leave, the students must explore the reasons why the banker is leaving to understand that even the best efforts to develop a strong culture can be defeated by a failure in management—it is at this point that a CEO may need to acknowledge his/her mistakes in order to gain loyalty. Finally, students are asked to think through the challenging situation Seefried faces during the financial crisis, considering the various approaches they could take to keep their key bankers on board.