In 2023, RMZ Corporation ("RMZ") a large family-owned real estate firm based in Bengaluru, India, announced plans to transform from a commercial real estate developer to a diversified alternative asset owner. Over the next 5 years, RMZ looked to grow its real estate portfolio from $13 billion to $40 billion and generate an additional $15 billion in asset growth from its new infrastructure business. Some of this expansion was to occur in markets outside of India. Were RMZ's goals achievable? What would it take to execute this plan? What were the risks?
SofMedica Group had expanded from its origins as a medical equipment distributor in Romania to a holding company with four business lines operating in six countries. This expansion had been driven by SofMedica's mission: to make cutting edge medical technology available to the remotest patient by enabling healthcare professionals through education and access to innovation. As the company marked its 30-year anniversary Georgios Sofianos, SofMedica's CEO and owner, considered the many opportunities and challenges facing SofMedica.
Adam Shapiro and Graham Duncan launched East Rock Capital, LLC in 2006 with a seed investment from Stuart Miller, executive chairman of Lennar Corporation. East Rock managed long-term assets for high-net-worth families, primarily working with external managers who had proven themselves at larger firms and had recently launched firms of their own. This approach allowed the organization to build a network of small and mid-size investment firms that it viewed as a source of investing edge. Shapiro considered how East Rock should approach growth going forward.
Founded in 2020, Adventures worked with celebrities in Brazil to create and launch digitally native brands. The idea was to match the celebrity's skill in creating content and entertaining fans with Adventures' skill in consumer packaged goods marketing and operations. Each brand was structured as its own company, with Adventures as the majority shareholder and the celebrity as the minority shareholder. The founders aimed to launch five successful brands over the next five years, generating $100 million in annual sales. Was Adventures a viable business?
In 2023, The Official Board surveyed 853 executives on the topic of talent incubators/academy companies. Executives were asked to list the top three academy companies within their function, industry, and country. They were also asked: what practices differentiate these companies; if they matter when hiring; and if talent academies were harder to identify today than in the past. The note summarizes the findings.
In July 2022, Celsius Network filed for Chapter 11 bankruptcy. CEO Alex Mashinsky acknowledged that Celsius had grown its assets "faster than the Company was prepared to deploy [them]" and as a result had made "certain poor asset deployment decisions." Two months after filing, Celsius initiated a marketing and sale process to identify potential buyers for its assets. By April 2023, the field was reduced to NovaWulf and Fahrenheit, LLC. Both bidders proposed reorganizing Celsius' business as a going concern and giving its creditors and 1.7 million customers near-total ownership of the reorganized company. However, the ultimate fate of Celsius' many stakeholders remained anything but clear.
In November 2018, Dell Technologies was poised to re-enter the public markets by means of a complex recapitalization that would replace an entire class of publicly-traded "tracking stock," with new shares that would trade publicly without the need of a formal IPO. The tracking stock was meant to track the value of the publicly traded shares of the software company VMware, but from the outset had traded at a significant discount, sparking intense criticism from analysts and shareholders, including Carl Icahn. In July 2018 the company announced the recapitalization, in which tracking stock holders could exchange their shares for new Dell shares or cash worth $109 a share. Dell had subsequently increased its offer to $120 a share. While Icahn and other large shareholders responded favorably to the new offer, a group of shareholders filed a class action lawsuit against Dell, alleging the offer was "financially unfair and coercive," and that Dell's directors had breached their fiduciary duties to tracking stock holders.
Following Dell's return to the public market in 2018, the company's stock underperformed. In June 2020, the Wall Street Journal reported that Dell was exploring various options with respect to its majority stake in the virtualization software company VMware.
Based in New York, Convene was founded in 2009 by Ryan Simonetti and Chris Kelly. Convene was founded on the question: "What if you ran an office building like a hotel?" The company offered a premium corporate events and workspace product. Convene initially took a measured approach to growth, but in 2018, company leadership accelerated that growth. 2019 was a record year from a revenue perspective. However, the pandemic forced Convene to close all of its locations and reduce staff and operating expenses. In April 2022, Hudson's Bay Company (HBC) announced that it was taking a majority stake in Convene, marking the beginning of yet another chapter for the company.
Shelly Sun had founded BrightStar Care, a home health care and medical staffing agency, 20 years earlier and had grown the business to over 300 franchised locations and $654 million in annual system-wide sales. Sun had spent years working to get "the right people in the right seats" and now had a strong bench of executive talent. Sun loved being an ambassador for BrightStar and spent considerable time with external stakeholders, including policymakers. But there were times she still felt she needed to take the reins-after all, no one knew BrightStar like she did.
On June 6, 1944, nearly 5,000 ships, 11,000 planes, and 160,000 infantrymen under an Allied joint-command of American, British, and Canadian leaders were sent across the English Channel, with hopes of re-establishing a foothold in Nazi-occupied France. Known as D-Day, June 6 marked a definitive turning point in World War II and was viewed by many as the most significant military campaign in history. It was also one of the riskiest. Code named Operation Overlord, the invasion required years of diligent planning and countless hours of labor from Allied soldiers and citizens. Before they could attempt a successful invasion of continental Europe, British and American leadership recognized large scale preparatory efforts must take place: the establishment of a leadership team and organizational structure, the arrival of Allied troops in England and subsequent training sessions, the containment of German air superiority over Europe as well as its supply lines, and finally, the development and use of innovative information sources in planning the attack.
In 2016, Martin "Marty" Walsh, the Mayor of Boston, introduced CityScore, a data dashboard that measured the city's progress across a range of metrics. The dashboard was updated daily and publicly available. The mayor frequently discussed the CityScore targets in cabinet meetings and the information it provided had become a tool in making policy decisions and allocating budgets. It is 2022. What should become of CityScore? Should future administrations continue to use it as a tool to measure the city's performance? If so, how should they consider adapting it?
In November 2019, the iconic U.S. jeweler Tiffany agreed to be acquired by the luxury goods conglomerate LVMH. The $16.6 billion transaction was scheduled to close in mid-2020. However, in 2020, the global COVID-19 pandemic took a toll on the luxury goods sector. In September 2020 LVMH announced that it was backing out of the deal. Tiffany filed suit against LVMH. LVMH countersued, arguing that the pandemic triggered a material adverse effect (MAE) clause included in the merger agreement.
In March 2020, in response to the global pandemic, the cruise industry ceased operations. Carnival was the largest cruise line operator in the world, and CEO Arnold Donald and his management team worked to position the company to survive. They slashed operating expenses and capital expenditures, raised more than $10 billion in new debt and equity financing, and negotiated with creditors. Planned ship deliveries were cancelled, and less efficient ships were retired or sold. Had the company done enough?
After hitting an all-time low in 2008, Domino's Pizza underwent a vigorous rebranding, product development, and embraced innovative technologies to become the world's leading international fast-food retailer. Domino's considered itself as much a tech company as it was a purveyor of fast food, with digital orders accounting for a high percentage of sales. Domino's was run more like a Silicon Valley company than a fast food chain and was described by CEO Patrick Doyle as "a technology company that delivers pizza." As it bested rivals like Pizza Hut and Papa John's, Domino's declared itself "The Official Food of Everything." In 2020, as much of the world remained in lockdown Domino's, which offered delivery options from drones to driverless vehicles, saw a jump in sales. How did Domino's become the world's leading restaurant?
By aligning executives' financial incentives with company strategy, a firm can inspire its management to deliver superior results. But it can be hard to get pay packages right. In this article four experts break down the key elements of compensation and explain how to put them together effectively. When designing packages, boards must make decisions about the proportion of fixed versus variable pay, short-term versus long-term incentives, cash versus equity, and group versus individual rewards. Many look at the copious data available on executive pay and benchmark their plans against those of their industry peers. The mix is also driven by company size, region, culture, and risk appetite. A good plan always begins with a firm's strategic goals, however. Is the company striving for profitable growth, a turnaround, or a transformation? Is it trying to compete with public companies as a private entity? Each scenario calls for a different plan design. The Covid-related economic crisis may also alter plans. If targets become unachievable, incentives will lose their power and need to be revised--offering firms a chance to incorporate measures that serve stakeholders' interests better.
In early 2020, the California-based utility PG&E filed a second amended plan of reorganization. PG&E had filed for Chapter 11 bankruptcy in the face of more than $30 billion of legal claims brought against it for its alleged role in causing California wildfires. The plan had the support of key creditors and shareholders and a court-appointed committee representing the wildfire victims. However, it faced strong opposition from California's governor, Gavin Newsom, who was concerned that PG&E's plan would leave it too highly leveraged, and unable to make necessary investments. Were Newsom's concerns valid ones? Did the plan as currently envisioned leave the reorganized PG&E with too much debt to meet its obligations to the wildfire victims while still making the necessary investments to update its equipment? And was PG&E prepared for the new reality of climate change?