Two entrepreneurs who claim that they came up with the idea to turn around Britain’s largest pawnbroker are suing the private equity house that made tens of millions doing the deal without them.
Paul Vercoe and John Pratt say that Rutland Partners, a private equity firm, agreed to work with them after they presented a confidential proprietary plan to buy and expand Harvey & Thompson, then a US-owned private pawnbroker. The pair say that, in return for the business plan, Rutland agreed that they would be given senior positions and equity stakes in the business after the takeover.
Rutland bought Harvey & Thompson for £72 million in September 2004 but neither Mr Vercoe nor Mr Pratt had any further involvement with or received a stake in the business.
They claim that Rutland stole their ideas and pushed them aside in favour of Peter Middleton, the former chief executive of Lloyds of London, who was installed as Harvey & Thompson’s chairman. Mr Vercoe and Mr Pratt claim Rutland used ideas from their business plan to expand Harvey & Thompson before floating it as H&T Group in May 2006. The flotation valued H&T at £90 million, securing a profit of at least £44 million for Rutland, according to court papers.
Mr Vercoe and Mr Pratt went to the High Court in London yesterday to ask for an unspecified share of Rutland’s profits from the deal. Their lawyer, Guy Newey, QC, told Mr Justice Sales that Rutland committed a breach of contract and confidence when they bought Harvey & Thompson “without the slightest regard” to its obligations to his clients.
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Mr Newey said that both sides had agreed to the terms on which Rutland could use the business plan. “Mr Vercoe and Mr Pratt specifically did not want to tell Rutland their idea without making sure Rutland could not pinch it,” he said, adding that, at the time of the takeover, it was not widely known that Harvey & Thompson was for sale and that Rutland Partners had no expertise in the pawnbroking sector.
He said that he would call expert witnesses to testify that, “but for the introduction” by Mr Vercoe and Mr Pratt, Rutland would not have considered Harvey & Thompson as a target.
Rutland declined to comment. Neither H&T, nor Mr Middleton, who stepped down in September 2008, are parties to the litigation. The case continues.