Mike Hatt, Nelson Bakewell’s managing director, was this week handed executive control by the company’s 25 shareholders after CBRE backed out of its £18m takeover of the business.
The company’s seven-strong management committee, which included department heads, has also been abolished and replaced by an executive triumvirate of Hatt with Alan Dornford, now client services director, and finance director Richard Dunkley.
“The shareholders no longer have a say in this business,” said Hatt. “I have complete executive control. The management committee has effectively been disbanded.
“I’ve asked them to get back on the shopfloor and look after our clients.”
Hatt said that shareholders’ desire to cash in had led to the decision to sell the business, against the wishes of the 324 staff.
“Our focus on shareholders got in the way of some clear business thinking. The shareholders wanted to do something that was bad for the business,” he said.
He described the deal with CBRE as “madness”, caused by “a kind of snowblindness”.
Hatt said the change in leadership was supported by “the majority of shareholders”, led by co-founders Philip Nelson and Simon Bakewell, who own 17% each. Hatt now wants to devise a new ownership structure.
“The existing share structure clearly isn’t going to get us beyond the 22 years we’ve had. So part of the challenge is to come up with a solution. I will be talking to the shareholders about a succession plan.”
One suggestion was that Nelson Bakewell could become a traditional partnership, where partners put in equity when they join the firm and take it out when they leave.
An alternative would turn the company into a John Lewis-style partnership, with each staff member holding equity.
But Hatt rejected the possibility of a management buyout. “There’s no point in me buying Phillip’s shares. What we need is a more dynamic, moveable shareholding.”
Finance director Richard Dunkley said the company would restructure the internal share market so that stakes could be sold on.
“Inevitably, shareholders will want to cash in,” said Hatt. “Otherwise there’s no point in having the shares.”
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At 30 September 2004, founders Phillip Nelson and Simon Bakewell had 4m of shares each in the company, worth an estimated £4m-£5m, based on CBRE’s second offer of £18m and its first offer of £22m. Other directors’ holdings ranged from property management director Martin Holland’s 50,000 shares to director of investment consulting Charles Allison’s 2.97m shares. At September last year, 23 directors held outstanding options to buy 2.9m shares. Several directors exercised the options in December last year, with many doubling their shareholding. If NB had been sold for £18m, it would have made the 17.6m shares worth roughly £1 each. Directors’ stakes as of 30 Sept 2004: Phillip Nelson – 4.06m Simon Bakewell – 4.06m Charles Allison – 2.97m Dave King – 1.48m Mike Hatt – 1.35m Jonathan Haynes – 1.2m Tracy Collins* – 1m Nigel Wheeler* – 810,000 Tim Asson – 455,000 James Cannon* – 75,000 Ali Ballantine* – 25,000 *No longer at the firm |
