Rev. July 17, 1998
This case was prepared by Michael J. Roberts, Associates Fellow, under the supervision of Professor Howard H. Stevenson, as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Copyright 1983 by the President and fellows of Harvard College. To order copies orrequest permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
1 Heather Evans
It wasMay 10, 1983, and Heather Evans’s graduation from Harvard Business School was less than a month away. Although she had just taken the last of her final exams that morning, Heather’s thoughts could not have been further from school as she boarded the Eastern Shuttle and headed back to New York. The trip was a familiar one, for Heather had been commuting between school and Manhattan in an attemptto get her dress company off the ground.
Many of the elements of the business were falling into place, but the securing of $250,000 in financing remained elusive. Her business plan had been in the hands of potential investors for over a month now, and her financing group was simply not coming together. Her contact at Arden & Co., a New York investment firm and hoped-for lead investor, was noteven returning her phone calls. A number of small, private investors had been stringing her along for some weeks, but whenever Heather tried to go that next step and negotiate specific financing terms with any one of them, the rest of the group seemed to move further away. Heather expressed her frustration:
I was really counting on Arden & Co. to be my lead investor; this would lend bothcredibility to the deal and give me one party to negotiate terms with. Then I could go to these private investors, point to the deal I’d struck with Arden and say, “These are the terms—make a decision.”
Now, if I give each of these investors what they want, I’ll end up giving the company away. But I do need the money, and fast. In order to get out a holiday (winter) line, I need to start placingorders for fabric in the next month. All this, in addition to the rent and salaries i am committed to.
I don’t know whether I should stick with the private investors I have and somehow try to hammer out a deal, or really work on getting a venture firm as a lead investor—maybe there is still a chance of bringing Arden & Co. around. Maybe I should try to get less money, or move back my timetableand wait for spring to introduce a line.
Heather Evans graduated from Harvard College in 1979, having earned her bachelor’s degree in philosophy in three years. A Phi Beta Kappa graduate, Heather had been a working model throughout her college career, appearing in such publications as Mademoiselle, Seventeen, and GQ.
384-079 Heather Evans
Heather applied to the Harvard Business School duringher senior year, and was accepted with a two-year deferred admit to the class entering in 1981. She accepted a position with Morgan Stanley as a financial analyst. Heather explained the origin of her interest in a business career: My father is an attorney with a Wall Street firm, and many of my parents’ friends were “deal-makers” who had gone to the Business School. I thought that I would like thatkind of work and the life-style that went along with it. In addition, my career as a model gave me a taste of running my own business—the independence, the travel, the people—and I loved it. I knew, though, that I would need a good solid background to gain the skills and credibility necessary for success.
I thought that working for an investment bank like Morgan Stanley would give me the...