Impact Makers (a): The Newman's Own of Management Consulting

Abstract

This case requires students to evaluate alternative dual-share-class corporate structures that allow companies and entrepreneurs to pursue profit with purpose. The case explores Impact Makers, an IT consulting company based in Richmond, Virginia. While original founders of the firm hold all voting rights, the cash flow rights belong to two nonprofits setting the stage for a Newman's Own model of management consulting. The case discusses whether and how the alternative corporate structure aids the firm's overall strategy to attract top-quality employees, pay them competitive salaries, and provide superior service to its clients while donating 100% of its lifetime value to charitable causes, largely through partnerships with various nonprofit organizations. More importantly, the case asks students to evaluate how such a dual-share-class and dual-purpose company can raise capital to fund continued growth. The case opens with CEO Michael Pirron reminding himself of all the questions he had run through to execute a strategy to further grow Impact Makers' consulting business both through expanding a menu of services and through conquering new geographical markets. To do either, or both, the company needed a cash infusion. Internal cash was limited, as up to 40% of it flowed to charitable partners, demonstrating Impact Makers' commitment to its mission. Raising debt for a company without fixed assets was challenging and time consuming. Complicating it all was that being structured as a nonstock corporation rendered equity raising difficult. Could Impact Makers raise money to grow and stay true to community values at the same time? Excerpt UVA-F-1797 Rev. Jul. 25, 2019 Impact Makers (A): The Newman's Own of Management Consulting I'm a fiscal conservative, and I don't believe in unbridled capitalism. Impact Makers is how I could best use my skills, experience, and training to go to work every day and make an impact in the world and change the world. That's not why everyone is here, but that's why I'm here. —Michael Pirron Michael Pirron was looking in a mirror thinking about the difficult task he had at hand. Nine years earlier, in 2006, he founded a new type of company, Impact Makers, with the help of $ 50, a single client, and a laptop. On the surface, the company was no different than any other IT consulting company: it attracted top-quality employees, paid them competitive salaries, and provided superior service to its clients. What was different was that the company was committed to donating 100% of its lifetime value to charitable causes, largely through partnerships with various nonprofit organizations. In 2015, Impact Makers reached annual revenue of $ 17.8 million and had cumulatively contributed more than $ 1 million to local charities since 2006. By any standards, Pirron's built-from-scratch model had made a significant impact on the local community. But was it enough? . . .