Cumberland Entertainment (A): Expanding with Private Equity?

Cumberland Entertainment, a niche music producer, was looking for capital to finance its planned expansion. CEO, Tom Smith, entered into negotiations with private equity firms, and struck an agreement that turned out to be incomplete. As a result, serious problems arose between financial investors and management. The case series describes how the parties dealt with these problems as their relationship evolved.

1. To highlight and analyze the dynamic nature of entrepreneur, venture capitalist relationships, and to address some of the key issues that might arise over time (e.g., how to share risk, when and how to exit). 2. To compare and analyze offers from different private equity firms, as well as different offers from the same firm made in the course of negotiations.