Montebello Capital (B)

Montebello Capital (B)

By
William Barnett, Brad Wolfe
2004|Case No.E140B| Length 35 pgs.

This case documents the many challenges faced by protagonists John Fowler and Josh Greenberg, two young post-MBAs who embarked on a brave journey otherwise known as the search fund process. Although possessing limited real-world experience, these best friends had the audacity to believe that, on the fly, they could learn to raise the investment capital necessary to establish their fund, identify a profitable/manageable industry, acquire a company within that industry and then seamlessly transition into their roles as the new co-CEOs. In Montebello Capital (A), Fowler and Greenberg were able to attract investors and raise the requisite capital to fund their search. Yet, after almost one year of looking, and with their search funds dwindling, they had failed to purchase a company. In Montebello Capital (B), after identifying an industry that met their specific criteria, they finally reached the decision to acquire a business. Particular attention is given in the case to the tension in their partnership, the due-diligence and negotiation processes, and the fundraising efforts necessary to convince their initial search fund investors to re-ante and fully fund the acquisition. After the purchase, Fowler and Greenberg immediately assumed operational responsibility of the company. But as first-time CEOs and with no prior experience in the industry, can they transition smoothly into their new roles; learning the business, phasing out the old leadership, grappling with pressing HR and operational matters, gaining employee loyalty, and all the while preparing a growth strategy for the company’s future?

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