5 Berkshire Partners Bidding For Carter S

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9-205-058 REV: AUGUST 19, 2011 MALCOLM BAKER JAMES QUINN Berrkshire e Partne ers: Bid dding ffor Cartter’s In the spring of o 2001, Bostton-based priivate equity firm Berkshiire Partners w was considerring a levera aged buyout (LBO) of the William Cartter Co., a lead ding producerr of infant, baaby, and child dren’s apparrel in the Un nited States. Berkshire B Parrtners, which h had extensiive experiencce investing iin the retail and manufaccturing sectorrs, was initia ally drawn to o Carter’s beccause of the sstrong brand name ngth of the ssenior the co ompany had developed during d its 136 6-year history y, as well ass for the stren mana agement team m. (See Exhibitt 1 for a profille of Berkshirre.) To o investigate the t option off a…show more content…
Many members of his executive team were also former managers with VF Corporation. With a strategy of simplifying Carter’s products, Rowan and his team returned to producing what they called “high-volume, basic apparel.” Product design remained relatively consistent from year to year: About two-thirds of the apparel was carried forward from season to season with the same fabric and construction, varying only through color and artistic layout. Rowan and his team also focused on improving the capabilities of their supply chain while exploring offshore sourcing options. Throughout the company’s history, it had relied on domestic manufacturing to produce its clothing. But amidst an increasingly global environment in which more and more U.S. companies were outsourcing production abroad, Rowan sought cost improvements and “manufacturing flexibility” through manufacturing abroad. In 1992, Carter’s closed two of its domestic sewing plants and made plans to close six additional sewing plants and its main textile mill. Central America and Mexico soon became the company’s first international production sites. By 1996, with operating and financial performance beginning to turn around, Carter’s was acquired in a leveraged buyout by Investcorp S.A., the Bahrain-based firm best known for

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