DreamWorks Animation Case Study Part 2: Offers and Deals

Mellody Hobson

Lesson time 09:50 min

Mellody unpacks the two options that presented themselves at DreamWorks and explains the challenging decision that the board needed to make. Although both options involved selling the company, the outcomes would be far from the same. She prompts you to consider how you would navigate the situation.

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Topics include: DreamWorks Animation Case Study Part 2: Offers and Deals


[MUSIC PLAYING] - There's no moment of truth. So this isn't one of these things where it's like, we have to make a decision right now. This is an evolutionary conversation. It's evolving around the environment. There's not-- no burning issue that says, right now, it's a do or die moment. However, we've had some overtures come to us. And those overtures were probably people sitting in boardrooms, thinking about their own futures and saying, who's out there? What's going on? Are there opportunities? So at this point, we'd been exploring many options. We were making acquisitions, trying to put out movies for less, and looking to reduce our overhead. When these overtures came in, we had to take them seriously. There are a lot of considerations that you have to make when you're considering selling a business. So you have to think about, is that the best price you can get, because remember, our job is to the shareholders, who own shares in this company? So have we maximized the opportunity for them? Is this price that we could take better than the potential future of the company if it stayed as a standalone business? Could the stock price go up more just running the business as we were running it and have it do what it does? So you're weighing that. You're weighing who the buyer is. Does the buyer have the money? That's a real question. Does it have the ability to execute the transaction? Would the transaction be permitted? So there are a whole host of considerations that you're thinking about to see, is this a viable deal or not? So we had an overture from Hasbro. And Hasbro had gotten into the movie business and done a really good job with the movie "Transformers." And they were looking at us and thinking, hmm, could you marry toys with an animated studio? This is not a crazy idea. And they approached us and wanted to have some conversations with us. And their board actually came and visited our studio. And it ended up not working out. There were some leaks around that visit. And it just didn't work out. Then we're approached by a private equity firm that was based in Japan. And that conversation was one that was serious, for sure. We didn't know where it was going. They were on a buying binge, to say the least. And they had a big portfolio that they were working with, a lot of assets. And they were looking for special assets to add to their portfolio. And in some ways, we made a lot of sense. We engaged in some early discussions. Again, there was a leak about these discussions. And that was something that pretty much derailed the deal. Those two examples underscore the need for confidentiality. When these things are not properly packaged, they can do great damage in organizations. And so both of those situations-- the conversation basically got away from us. Overtures lead to more overtures. Then we had a Chinese private equity firm come to us. And this one-- again, none of these were expected. This C...

About the Instructor

Mellody Hobson knows how to make tough calls in trying times. As one of the most influential leaders in business today, she’s led companies through junctions of financial crisis, acquisitions, and restructuring. Become a more dynamic, confident business leader by diving into real-life case studies from Mellody’s career. Get an inside understanding of the pivotal decisions she’s made from the top, and build a strategic decision-making framework for your next step as a business leader.

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Mellody Hobson

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