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Om Buyout Case

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OM Scott Case
This is the story of the leveraged buyout of Scotts Company by a private equity firm, Clayton and Dubiler (C&D). Scotts Company was acquired from ITT. ITT was a global conglomerate with major holdings in Telecommunications, Entertainment, Insurance, and industrial products. The following is extracted from a brief history of IT (http://www.itt.com/_docs/news/pubs/itt-history-book-2011-eng-spread.pdf)
ITT’s origins span more than one hundred years from the second industrial revolution to the computer age. During that time, the company expanded through acquisitions to become one of the world’s biggest businesses and then narrowed its focus to achieve a place as one of the top financial performers among multi-industry companies on Wall Street. We didn’t follow the crowd. Instead we created our own path and helped fine-tune the concept of a multi industry company that generates value from a shared management approach and synergies between our businesses.
The following is extracted from C&D’s mission statement (http://www.cdr-inc.com/about/building_businesses.php): Question:
C&D forced a number of changes on the Management Control System of Scotts. Some of these are discussed in the case: 1) Incentive Compensation, 2) Management Decision-Making Authority, 3) Monitoring and Advising Management. Why were these changes needed?

O.M. Scott & Sons Company Leveraged Buyout
Debt Covenants
The organizational changes that Scott went through after the leveraged buyout were subtle, but extremely important. A comparison of the company from pre-buyout to post-buyout doesn’t reveal much difference in the business that Scott is in. They are still a market leader in the lawn care sector, still provide the same products and services and still have the same management team. The differences between the two come to light when you look at the…...

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