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.

Getting Started

Appropriate Subject Area(s):

Entrepreneurship, business management, harvesting the business

Key Questions to Explore:

  • Why do private equity firms invest in on-going businesses?
Study and Discussion Activity

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.
  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 and Additional Learning

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.