Assignment: You’re an analyst for a small private equity company. You have the final say in making an investment in Barrel Harbor Brewing (BHB). The attached fundraising pitch comes directly from the WeFunder private equity funding platform. This was a real pitch as of 8/20/18. On WeFunder, you can invest directly in a company in exchange for equity. In other words, the BHB pitch is a not a Kickstarter campaign, but rather a real equity fundraising round.
Instructions: Read the attached business fundraising pitch for Barrel Harbor Brewing. You will give your argument using the framework in Porter’s “What is Strategy?” reading as well as our in-class discussion. The pitch is here:
Barrel Harbor Brewing (BHB) Pitch – Unzip and click on the html file for Full Webpage
Note: If you can’t get the zip file to work, you can use the attached all-text pdf.
Notes: Please don’t get lost in the minutiae of the investment decision itself. This is meant to be an analysis using Porter’s “What is strategy?” article. So don’t worry about the investment specifics. You can assume that you are
investing in equity (remember finance??) shares at a fair price
the owners are competent and managing the company in line with best practices at the “productivity frontier.”
Questions for Your Writeup:
1. Can BHB generate excess (also called economic) profits? That is: excess profits above all costs and the opportunity cost of capital) as defined by Porter. Use the framework in “What is strategy?” Pay special attention to pages 1-4.
2. Can a craft brewery like Barrel Harbor have, what Michael Porter would agree is, a business strategy? Why or why not?
3. As an investor would you invest in BHB? Why or why not? Use Porter’s article (unique & valuable position, trade-offs, fit, etc.) to justify your rationale.
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