What business processes were used to establish the Chevrolet motor company?

By Andrew Beattie AAA
A:

William Durant, the founder of General Motors, lost control of his company due to his aggressive expansion plans. Going wholeheartedly from a carriage manufacturer to an automotive force, Durant used debt to finance his takeovers and mergers with other auto startups. The bankers, who helped with refinancing efforts, and the stockholders, to whom Durant had sold and resold shares, finally decided to oust him and consolidate current holdings, rather than to continue the breakneck expansion.

Durant immediately began to look for a way to regain control of his company. He hooked up with a Swiss racer named Louis Chevrolet and the two formed Chevrolet. Although Durant soon disagreed with Chevrolet about the direction of the company and bought him out, the company was highly successful. Durant still held a large amount of GM stock and he used the profits from his new company to buy even more.

Durant eventually owned enough GM stock to bring the company to the table for merger/buyout talks. Durant offered a five-for-one stock swap. GM shareholders jumped at the chance to get another popular brand under their umbrella at a cheap price. GM particularly relished merging with a brand that could help it fight off Ford. As part of the deal, Durant regained control of the company he had founded.

However, Durant's success was not long-lived. The company once again suffered from Durant's management and in 1920 Pierre Du Pont, Durant's main financer, ousted him for good. Durant tried repeatedly to replicate his former successes, but he was never able to create another GM or Chevy.

(For related reading, see Henry Ford: Industry Mogul And Industrial Innovator.)

This question was answered by Andrew Beattie.

RELATED FAQS

  1. What is a roll-up merger and why does it occur?

    Find out what a roll-up merger is and how it is executed. See why roll-ups might bring added efficiency and competition into ...
  2. How can I become a venture capitalist?

    Find out what it takes to become a venture capitalist, and read about some of the primary attributes private equity firms ...
  3. What are some of the disadvantages to taking venture capital?

    Learn how financing a business through venture capital can be a viable source of funding for small businesses but know caveats ...
  4. Are dividend payout ratios different in different economic sectors?

    Discover which economic sectors have traditionally higher or lower dividend payout ratios and the various factors that determine ...
RELATED TERMS
  1. Age Discrimination In Employment Act Of 1967

    A federal statute protecting "certain applicants and employees" ...
  2. Asset Valuation Review (AVR)

    A process that establishes an estimate of the value of a failed ...
  3. Assisted Merger

    The merger of two or more financial institutions undertaken with ...
  4. Assuming Institution

    A healthy financial institution that purchases the assets of ...
  5. Acquisition

    A corporate action in which a company buys most, if not all, ...
  6. Cottage Industry

    A small-scale industry often operated out of a home, rather than ...

You May Also Like

Related Articles
  1. Savings

    Is There a Way to Get Out of Your Car ...

  2. Savings

    Your Lease Is Up: When Should You Buy ...

  3. Savings

    When Is Leasing A Car Your Best Bet?

  4. Investing Basics

    Undervalued Franchises: The Best Choice?

  5. Budgeting

    The Momentum, And Methods, Behind Walmart's ...

Trading Center