Davis Boatworks Essay

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Harvard Business School 9-899-248 Rev. February 22, 2001 Davis Boatworks Carson “Buddy” Davis, the 50-year-old owner of Davis Boatworks leaned against the railing on the deck of his weathered beach house in Wanchese, North Carolina and took in the sunrise over the Outer Banks. Davis had more to appreciate than his perfect view of the ocean and his “backyard” of pristine sand and blue water. Davis was, after all, both a celebrity in the world of sportfishing and a successful businessman. He had devoted his entire adult life to making the most seaworthy and recognizable sportfishing boats in the world; enduring recessions, punishing luxury taxes, evolutions in technology and financial crisis. Now, in March of 1999, he could take comfort in the fact that he had built a company that was as successful in many ways as his customized boats were impressive. Davis, however, was anything but content. His thoughts on this cool March morning were not on his successes, but on the future of his 26-year-old manufacturing company. The popularity of his boats had created a surge in demand that outstripped his company’s current capacity. Davis Boatworks desperately needed an infusion of capital to expand the business and to streamline operations. Additionally, Davis knew that the time was right to diversify his net worth. Apart from $200,000 in liquid investments and $2.3 million worth of commercial and residential real estate holdings, nearly all of his net worth was tied up in the equity of Davis Boatworks. As the sun peeked above the horizon, Davis pondered his options. He needed an equity partner, but was unsure as to who he should bring on board. Would a new investor allow him to take enough “chips off the table” to secure his personal financial situation? Could he raise enough money to expand the business and to provide his company with sufficient

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