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):
- Ask the class if they have been in a Roots store. What are their thoughts about the brand? List key words on the board.
- Share the history of the brand with the class. http://rootsinformation.com/
- Distribute the article for reading.
- 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.
- Students understand the difference between private equity investment and taking a company public.
- 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.