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Case Study 10-1 Deb Ltd

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Case Study 10-1 Deb Ltd. Seeks an Exit Strategy In late 2004, Barclay’s Private Equity acquired slightly more than one half the equity in Deb Ltd. (Deb), valued at about $250 millon. The private equity arm of Britain’s Barclay’s bank outbid other suitors in an auction to acquire a controlling interest in the firm. PriceWaterhourseCooper had been hired by the Williamson family, the primary stockholder in the firm, to find a buyer. The sale solved a dilemma for Nick Williamson, the firm’s CEO and son of the founder, who had invented the firms’ flagship product, Swarfega. The company had been founded some 60 years earlier based on a single product, a car cleaning agent. Since then, the Swarfega brand name had grown into a widely known brand associated with a broad array of cleaning products. In 1990, the elder Williamson wanted to retire and his son Nick, along with business partner Roy Tillead, bought the business from his father. Since then, the business has continued to grow, and product development has accelerated. The company developed special Swarfega-dispensing cartridges that have applications in hospitals, clinics, and other medical faculties. After 13 years of sustained growth, Williamson realized that some difficult decisions had to be made. He knew he did not have a natural successor to take over the company. He no longer believed the firm could be managed successfully by the same management team. It was now time to think seriously about succession planning. So in early 2004, he began to seek a buyer for the business. He preferably wanted somebody who could bring in new talents, ideas, and up-to-date management techniques to continue the firm’s growth. The terms of agreement called for Williamson and Tillead to work with a new senior management team until Barclays decided to take the firm public. This was expected some time during the five-to-seven year period following the sale. At that point, Williamson would sell the remainder of his family’s stock in the business (Goodman, 2005). Discussion Questions 1. Succession planning issues are often a reason for family-owned businesses to sell. Why do you believe it may have been easier for Nick than his father to sell the business to a non-family member? 2. What other alternatives could Nick have pursued? Discuss the advantages and disadvantages of each. 3. What do you believe might be some of the unique challenges in valuing a family-owned business? Be specific.