Calaveras Vineyards Case Study Evaluation

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Calaveras Vineyards Case Study Evaluation MBA 634 Measurement II May 11, 2012 Problem Statement: Golden Gate Capital is contemplating a loan proposal submitted to them by Nations Bank to participate in the management acquisition of Calaveras Vineyards. Golden Gate worked with Nations Bank on previous investments and had positive profitable results. Anne Clemens at Golden Gate Capital must make a determination if Calaveras Vineyards will be a wise investment. Analysis: In 1994, Ann Clemens, Senior Vice President at Golden Gate Capital, a venture capital firm, was offered a loan proposal from Tom Howell, a managing Director with Nations Bank investment group. The loan described a purchase proposal of Calaveras Vineyards in Alameda Valley, California for $4.5 million. The loan consisted of $2 million in term loan and a revolving credit of up to $2.5 million. Clemens had success with previous ventures with Howell and she gave this new proposal serious thought. Clemens learned the two key decision makers at Calaveras, Dr. Lynna Martinez, VP & General Manager, and Peter Newsome, Operations Manager, were highly vested in making sure Calaveras regained its upward trajectory of growth since its slump in 1993. The slump was due to lack of marketing efforts and the fact that the vineyard was owned by a British company, Stout PLC, whose interest in Calaveras was low at best. Stout PLC acquired Calaveras as part of a larger conglomerate vineyard purchase and simply wanted to sell Calaveras to focus on larger wine and spirit markets. In a six year period, Calaveras changed ownership three times and despite this, Martinez and Newsome worked hard to keep their family-rooted reputation. They improved brand recognition and overall market position through major capital improvements, technology enhancements, market segmentation, and quality control

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