Carillion: Styles & Wood - same crisis, different outcome

Date: 17/01/2018
Author: McKeever & Partners
Company: McKeever & Partners

Ivan McKeever, McKeever & Partners, looks at the Carillion crisis. 

The terrible news of Carillion’s demise brings to mind our tremendous achievement in restructuring Styles & Wood Plc.

Between 2002 and 2006 I was part of a private equity backed team that grew Styles & Wood, a fit-out and refurbishment business, from a £100m to £270m turnover before listing on the London Stock Exchange. In 2007 I became MD then CEO of the business as we broke through £300m.

Life was good but events beyond my control were about to rake havoc on our business. As the extent of the Global Financial Crisis became clear our major retail clients cancelled orders and significantly reduced expenditure tipping the business into a steep decline leading to 2 profit warnings.

Deep cutbacks followed and sadly I had to lay off many fantastic colleagues. Like Carillion most of our work was delivered through a brilliant sub contractor base and they too suffered as we struggled to provide workload and pay them on time.

Before long we were breaching our RBS banking covenants and soon wound up at the doors of the now infamous Global Recovery Group, who were shipped in to sort the situation out.

Like Carillion our share price plummeted and the bank threatened to withdraw its support inevitably leading to an administration or pre-pack of the company.

Together with an outstanding Leadership team I devised a plan to restructure the business. Underpinning the plan were the “8 Key Drivers of Value” that would eventually stabalise the business and return it to profit.

Night after night, week after week, meeting after meeting we worked and sweated until desperately on the final hour of the final day we secured a £40m restructuring package that saved Styles & Wood Plc.

The 8 Key Drivers of Value that I put in place are:

  1. Believable forward looking business plan underpinned by great historics
  2. No significant dependencies in the business on customers, supplier or individuals
  3. Outstanding operational delivery and supply chain
  4. Recurring and dependable revenue
  5. A cash generating business model
  6. Loyal and satisfied customers
  7. A scalable business
  8. An outstanding management team and the best people in the sector

Over 200 jobs were saved, hundreds of subcontractors got paid and we traded out of the crisis and rebuilt a profitable, smaller (£130m) business that has gone on to flourish.

It can be done!