Gatewood and Daugherty: Minding Their Own Business

Abstract

Nathaniel Gatewood and Sean Daugherty were MBA students at the University of Virginia's Darden Graduate School of Business. They each held strong entrepreneurial desires and headed back to school with that goal in mind. Gatewood knew that he wanted to purchase a manufacturing company, but was unclear on how he should go about it. 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 an idea to become partners and explore a joint venture to purchase a company. Once school started, they met another classmate and partner, Eric Anderson, who acted as a catalyst to model their purchase plan into a Darden Business Project. In time, Anderson was offered a position in the private-equity group where he had summer-interned, 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 graduation, 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 later. This case illustrates the development process of two entrepreneurs and serves as an excellent introduction to the search-fund concept. It also promotes discussion around the topic of how to plan, manage, and make decisions in an uncertain environment.