Case Number: 5-107-009, Year Published: 2007, Revision Date: June 01, 2009
HBS Number: KEL315
Mergers and Acquisitions, Private Equity Investment, Corporate Governance, Hedge Fund Investments
This case explores how and why GM became a major user of private equity and hedge fund capital, as well as the risks and rewards of these new relationships. The Cerberus transaction, audacious in both its size and complexity, is explored in detail. What were the alternatives for GM, and what risks and opportunities lay ahead for both parties? This case further investigates the benefits, disadvantages, and potential conflicts of interest that evolved as GM’s many suppliers increasingly embraced low-cost, nontraditional financing from hedge funds.
To analyze the significant role that private equity and hedge funds play in providing capital to corporations, especially those in distressed industries.
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