Avid Life (B)

Learning Objective

This case can be used in undergraduate and graduate courses involving organizational behaviour, values, ethics, investing, and leadership. The specific objectives are two-fold. First, the case can be used to debate two perspectives of the function of the firm: the shareholder perspective (“The firm is an instrument for the shareholder”) versus the stakeholder perspective (“The firm is an instrument of society”). Both camps will hold vastly different opinions when discussing whether GMP Capital should have entertained the idea of raising funds for Avid Life. For example, the shareholder perspective tends to see the investment as a great opportunity, and articulate that investment bankers are paid to support legitimate businesses with potential, not serve as society’s moral compass. Others will argue that a good business leader should meet standards of excellence in areas such as health, well-being, employment equality, and environmental performance that reflect positive societal trends when they see long-term benefits for their shareholders, customers, employees, and communities. GMP’s investment would not fit that idea. The case can also be used to discuss values and lay a foundation for ethics discussions by introducing ethical theories and their applications. The case can be taught during an 80-minute session, and can be co-taught with a professor from finance who can provide additional detail on the work of investment banks and the role of reputational risk.