Berkshire Partners: Bidding for Carter's

9-205-058

REV: AUGUST 19, 2011

MALCOLM BAKER

JAMES QUINN

Ber

rkshire Partne Bid

e

ers: dding f Cart

for

ter’s

In the spring of 2001, Bost

o

ton-based pri

ivate equity firm Berkshi Partners w consider

ire

was

ring a

levera

aged buyout (LBO) of the William Cart Co., a lead

ter

ding producer of infant, ba

r

aby, and child

dren’s

appar in the Un

rel

nited States. Berkshire Par

B

rtners, which had extensi

h

ive experienc investing i the

ce

in

retail and manufac

cturing sector was initia drawn to Carter’s bec

rs,

ally

o

cause of the s

strong brand name

ngth of the s

the co

ompany had developed during its 136

d

6-year history as well as for the stren

y,

s

senior

mana

agement team (See Exhibit 1 for a profil of Berkshir

m.

t

le

re.)

To investigate the option of a potential LBO, Berkshir assembled a five-memb team, to b led

o

t

f

L

re

d

ber

be

by managing dire

ectors Ross Jo

ones and Bra

adley Bloom and senior a

associate Mich

hael Ascione (See

e.

Exhib 2 for biogr

bit

raphical sketc

ches.) The tea would hav less than e

am

ve

eight weeks to move throu all

o

ugh

the stages of a Gol

ldman Sachs-led auction—

—from initial r

research and due diligenc to valuation and

ce

bid st

trategy.

In addition to running the auction and thereby serv

ving as Carter agent, Go

r’s

oldman Sachs (GS)

s

would be offering “staple-on” financing. Under this arr

d

g

rangement, th winning b

he

bidder would have

d

the op

ption to finan the deal th

nce

hrough a prep

packaged capi structure proposed by Goldman Sachs.1

ital

Cart

ter’s

Ca

arter’s was fo

ounded in 18 in Needham, Massach

865

husetts. Over the course o 136 years i the

of

in

highly competitive apparel industry, the company bec

y

e

c

came the lar

rgest branded manufactur of

d

rer

toddle and baby apparel in the United State and also a leading mak of young c

er

a

e

es

ker

children’s clothing.

Divid

ding its mark into five segments—la

ket

ayette (i.e., n

newborn), ba

aby sleepwea baby play

ar,

ywear,

young children’s sleepwear, an young chil

g...