Corporate Strategy at Berkshire Partners Harvard Case Solution & Analysis

Corporate Strategy at Berkshire Partners Case Solution


Berkshire partners is one of the most successful companies in private equity industry, which holds dozens of acquisitions by the deal investments. It was founded by five professional businessmen in 1984 and served as a private equity firm in the U.S capital market.

Since its inception, the firm invested in more than 90 companies and managed to provide high yield returns to its valuable investors. The company has strong line of management and culture which plays a vital role for the company’s growth, however by 2008 the organizational structure changed due to business expansion and the focus was shifted more towardstechnical solutions rather than the traditional way.

The case discusses the potential pros and cons related to the new corporate governance and related organizational change. Moreover, it also shows that how the company will manage the change and consistently look for its objectives to reassess the process of funds management.

In 2008, there was a meeting between the managing directors and top management for the future performance of the company regarding the new organizational structure and objectives to raise the fund management activities. It was discussed that whether the investment group met the company’s five years objective or not, as well asthey wanted to know the existing culture of the firmwhich includes teamwork, collaboration as well as consensus.

However, it was also noted that whether the change could affect the competitive position for sustainable growth and maintaining the traditional organizational culture. In contrast, some issues had been identified for the company’s internal growth and these were directly proportional in slowing the company’s existing performance.

The highlighted issues were: lack of corporate governance to handle the company’s portfolio, the problem of professional development for the younger generation because of hierarchal redefined structure and the retention of existing culture.

In addition, there was a critical debate of introducing the Stockbridge for public trade finance facilities of different IPO related companies, which was subjected to increase the management size and expand the portfolio activities within the industry level. It was expected that it wouldallow every private equity investor to participate in the investment opportunities in the listed companies.

With all these proposed criteria, the company maintained its organisational structure by introducing new corporate governance under the same traditional culture. Berkshire wanted to decide whether this plan would beachieved in the future or not, and if yes thenit had to decide on how tograb the market share in the emerging public securities for the outside investors.

Industry analysis

It was noted that the private equity industry had fluctuated results in the past few years since its early inception in 1970, where the pension funds began to transact more cash to the selected asset classes subjected to equity fund and hedge. In the early 1980, many asset management companies had been found to allocate funds into different portfolios connected to the particular companies. The approximate figure of $5 billion was recorded in 1980 and was expected to grow in the upcoming periods.

During thoseyears, there were vast practices of leveraged buyouts by different equity companies to acquire the businesses where equity amount was considered to be less than the debt figure. The process was successful to generate high yield returns to the investors and debt providers and subjected to increase the volume over the years.

After a decade, the government securities were at peak in the industry which allowed to transact the amount in an acceptable debt ratio for the equity companies. Moreover, it was analysed that many firms tried to create value by offering friendly transactions and allowed the acquired companies to participate as a partner for the company’s decision making processes..................

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