Spyder Active Case Study

1. What is the current equity ownership structure of Spyder Active?

The current equity ownership structure of Spyder Active includes:

• 37.9% share of the company is owned by CHB
• 11.3% share of the company is owned by company employees
• 25.4% share of the company is owned by Jacobs
• 25.4% share of the company is owned by Shimokubo

1. What are the objectives of the diverse equity holders of Spyder?

The objectives of the diverse equity holders of Spyder is to gain operational and strategic expertise to help Spyder grow in the long run.

1. What are the potential exit option combinations for the various equity stakeholders?

The equity holders have the following exit options:

• Jacobs, CHB and Shomokubo sell their entire stake to a strategic buyer through a trade sale or a secondary private placement.
• Incase Jacobs and Shomokubo yet want controlling ownership stake – CHB would sell their minority stake to another private buyer.
• Since employees owned11.3% of the company, some of them might be willing to sell their stake as well.

Thus, the two options are to either sell to a strategic buyer or to a financial buyer.

1. Will all equity holders prefer the same exit options?

All equity stakeholders do not prefer the same exit options as Jacobs and Shomokubo might yet want to run this business and own a controlling stake. However, CHB would want to sell their entire stake in one go – probably in cash. Some employees might want to hold their positions while some might want to sell their shares.

1. Should there be some restrictions on the equity stakes being sold? How should the lock-ups be structured? What are the tradeoffs?

There should be some restrictions early on, as such a huge management change might affect the company in a very negative way. Maybe the old management is slowly phased out over a set time frame, so as to transfer operations to the new buyer. There should be a certain lock-up period considering Jacobs has his sons working in the company as well. Having lock-ups means that the current owners and equity holders share some responsibility in the short and medium-term growth of the company, especially during restructuring and expansion. The trade-off is that incase the company does not do well in the short term, the share price of Spyder would fall.