Gatewood and Daugherty: Minding Their Own Business

24 Pages Posted: 21 Oct 2008

See all articles by Gregory B. Fairchild

Gregory B. Fairchild

University of Virginia - Darden School of Business

Gerry Yemen

University of Virginia - Darden School of Business

Abstract

Nathaniel Gatewood and Sean Daugherty were MBA students at the University of Virginia Darden Graduate School of Business Administration. They each held strong entrepreneurial desires and headed back to school with that in mind. Gatewood knew he wanted to purchase a manufacturing company but was not clear on how he should go about doing so. Daugherty just wanted to work for himself. The pair met in their neighborhood and quickly became friends. Within a short period of time, Gatewood and Daugherty tossed around the idea of becoming partners and exploring a joint venture to purchase a company. Once school started they met another classmate and partner, Eric Anderson, who acted as a catalyst for modeling their purchase plan into a Darden Business Project. In time, Anderson was offered a position in the private equity group where he had interned the previous summer, and he backed out of the partnership. After some soul-searching, Gatewood and Daugherty decided to proceed without him. The pair took many steps in the due diligence process. They assessed their personal skills and interviewed faculty, entrepreneurs, and alumni. Along the way, they explored the concept of a search fund. As they got closer to graduating, Daugherty and Gatewood were forced to decide between securing a search fund and continuing to look for an acquisition or applying for lucrative jobs, like their classmates, and looking for a business to buy later. The case illustrates the development process of two entrepreneurs and serves as an excellent introduction to the search fund concept. It also promotes a discussion of how to plan, manage, and make decisions in an uncertain environment.

Excerpt

UVA-ENT-0013

Gatewood and Daugherty: Minding their own business

On an overcast Tuesday afternoon in late March 2001, Nathaniel Gatewood and Sean Daugherty faced each other as they stood on the brick corridor outside of the classroom building. They had met nearly two years earlier as neighbors in the student apartments that bordered the Darden Graduate School of Business Administration in Charlottesville, Virginia. As the pair chatted their way into school each morning an evolving discussion began to take shape. At the heart of what had led Daugherty and Gatewood toward obtaining their MBA was an entrepreneurial desire­â€”each wanted to own a business. A partnership formed.

As Gatewood and Daugherty looked at the fresh paint and landscapists' attentions that gave the school grounds the look of a country estate, they seemed very distant from the decision they needed to make. For almost 18 months, the two had worked on the process to buy a manufacturing company. As they got closer to graduating, Gatewood and Daugherty were forced to decide between securing a search fund and continuing to look for an acquisition or applying for lucrative jobs, like their classmates, and look for a business later.

The Beginning

Gatewood and Daugherty met the very day that Gatewood moved into the neighborhood. Daugherty and his wife Julie Daugherty saw them moving in just three doors down. As Julie Daugherty remembered:

. . .

Keywords: decision making, entrepreneurial finance, entrepreneurial management, entrepreneurship, risk management

Suggested Citation

Fairchild, Gregory B. and Yemen, Gerry, Gatewood and Daugherty: Minding Their Own Business. Darden Case No. UVA-ENT-0013. Available at SSRN: https://ssrn.com/abstract=908785

Gregory B. Fairchild (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/fairchild.htm

Gerry Yemen

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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