Roots Canada Ltd. is entering a new era as co-founders Michael Budman and Don Green cede majority control of the 42-year-old chain to private equity firm Searchlight Capital Partners in a bid to expand the retailer in North America, Europe and Asia.

Appropriate Subject Area(s):

Entrepreneurship, business management, harvesting the business

Key Questions to Explore:

• Why do private equity firms invest in on-going businesses?

Introduction to lesson and task:

This lesson offers a glimpse into the majority sale of Roots Canada from its founders to a private equity firm.

Action (lesson plan and task):

1. Ask the class if they have been in a Roots store.  What are their thoughts about the brand? List key words on the board.
2. Share the history of the brand with the class. http://rootsinformation.com/
3. Distribute the article for reading.
4. Using Think-Pair-Share strategy, ask students the following questions:

• What is a privately held company?
• What is a private equity firm?
• What is a majority stake?
• What’s the meaning of second generation rule?
• Discuss with the class why a private equity firm would be interested in Roots Canada as an investment.
• Roots owners had the option of taking the company public. What does this mean?  What are the benefits and drawbacks of that course of action?

Consolidation of Learning:

• The article states that the investment from Searchlight will lead to new and exciting opportunities for Roots.  Have students brainstorm with a partner what those opportunities might be.

Success Criteria:

• Students understand the difference between private equity investment and taking a company public.

Confirming Activity:

• Have students create a chart comparing and contrasting the qualities, benefits and drawbacks of privately owned companies, companies that have private equity investments and companies that are publicly traded.