Berkshire Partners: Bidding for Carter’s
1. Berkshire brought expertise in finding the right financing structure and operational and strategy related to the retail and manufacturing industry. Berkshire managers believed that the equity portion of a capital structure should be at least 25% to order to achieve the desired results as far as return and to show true commitment to the lending base. When determining the capital structure, they also seriously took into account such questions as: Is this the appropriate amount of leverage for a business of this type; what do the rating look like; how difficult will it be to get financing and what about financing costs? Once Berkshire had taken an equity position in a firm, Berkshire would help the firm management by prioritizing key objectives, improving organizational design, building a quality team of managers and aiding the integration process of a subsequent acquisition. Berkshire would add value up front with extensive due diligence, addressing opportunities for companies, and aligning strategically and building a strong relationship with management. Since Carter’s was an established business, they would receive a great deal of care and attention up front and then moderate to low oversight during the rest of the investment until exit. Berkshire also added value by exiting most of their investments by sale of a company instead of the typical IPO used by most private equity firms. Berkshire was more apt to facilitate an IPO in the middle of ownership with the intention of staying involved with the management and helping the company grow. Berkshire's deep acquisition experience and familiarity with capital markets enabled very attractive financing to be put in place, as Berkshire solicited the views of a range of potential partners including Merrill, First Union, Lehman etc. in order to ensure the optimal financing structure. In addition, Berkshire had met with the Carter...
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