Berkshire Partners: Bidding for Carters

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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
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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
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nsurance com mpany Mutu Benefit Lif and Wesray Capital Cor Carter’s h develope unprofitab product lin in ual fe y rp., had ed ble nes swimwear and un nderwear, and many of its more decora d s ative features (zippers, cu bows, etc.) were s ut not well received by consumers In 1992, the company ins w b
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e stalled a new managemen team led by CEO w nt y Frede erick J. Rowa with the intention of “steering it back to its c an, core niche of soft, comfortable f 1 Morg gan Stanley had recently made a similar offering to the eventual b r buyer of Dresser Equipment Gro r oup—underwriti $1.1 ing billion in debt financing after leading th auction. Whi staple-on fina he ile ancing was not a typical practice, it was becomin more
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ng commo on.
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Professo Malcolm Baker and Research Assoc or a ciate James Quinn, Global Research G
Group, prepared thi case. HBS cases a developed sole as the is are ely basis for class discussion. Cases

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