He speaks more like the chief executive of a start-up or a go-ahead public company. He also walks the walk. Last year, Stafford displayed considerable appetite for risk when he purchased Lifestyle Sports, the country’s largest sport retailer.
“We didn’t set out to get into sports retailing, it came out of left field,” said Stafford.
The family had been looking to diversify and an informal chat with Stewart Harrington, a well-known property figure and a director of Lifestyle, sparked interest. Harrington went to school with Stafford’s father, Victor. Ultimately this piece of serendipity led to the young chief executive writing a cheque for €59m and buying a chain of 71 sports shops.
Stafford describes the expansion as more of a necessity than a choice. Profits were rising in its core solid fuels business, but opportunities were shrinking. “It was a case of either pulling more dividends out or investing in new areas of growth.”
Stafford is not alone. Long-established Irish family companies are increasingly flexing their muscles in corporate Ireland, looking for growth and driven on by hungry young executives.
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Gowan Group, owned by the Smith and Maughan families, and best-known for importing Peugeot cars, last week announced the purchase of Senator Windows for an undisclosed sum. Sicon, the Sisk family’s investment company, has spent more than €60m on two medical- device companies in the past six months and the country’s largest building company is rumoured to be sizing up a third deal in the same sector.
Barry’s, the Cork-based tea importer, purchased the food group Batchelors for €62m, having previously dipped its toe into pharmaceutical distribution. The family also teamed up with the Gowan Group in 2004 to buy the Gardiner Group, a power-tool distributor. Gardiner itself has since spent close to €40m on acquisitions.
The O’Flaherty family, another car importer, last month snapped up a digital printing company, c3.
Ireland’s family dynasties are also vacuuming up top-class talent to spearhead their diversifications. The Staffords have hired Eoin McGettigan, a former executive with Dunnes Stores and Musgrave, to head its sport retailing business. It counts the dealmaker Richard Keatinge and Spar retailer Leo Crawford as non-executives.
Sicon’s board includes Phil Sykes, a former director of corporate finance at Goodbody Stockbrokers and one of the architects of the company now known as Newcourt, a publicly quoted recruitment and services group.
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Gowan Group hired Paul Duggan, a former chief executive of the publicly quoted engineering group Unidare, to drive distribution group Gardiner forward.
“In many ways, these families are Ireland’s answer to private equity,” said Louis O’Neill, head of transaction services at BDO Simpson Xavier, referring to the buyout firms that dominate corporate activity in Britain and America.
“Irish companies, in general, are too small to be on the radar of UK private- equity firms. Venture capital in Ireland is heavily biased towards technology. So in the management buy-in market, particularly, the family firms are a real force.”
And with Stafford alone looking to spend €280m on acquisitions in the coming years, the force will only get stronger.
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ACCORDING to O’Neill, the merchant families are seeking established, profitable, niche-operated businesses with strong customer relationships and market share. “Arguably, these criteria are more important to investors than the sector that the business trades in,” he said.
For Stafford, Lifestyle ticked all the boxes. “If you are going into a new area, then you are going to look to an established company, with a proven management team and a robust relationship with suppliers and customers,” he said.
The Sisk group, with its origins dating back 147 years, took a more methodical approach. Liam Nagle, a high-flying executive with stints at Intel, Bookham Technology and other multinationals, was hired in 2005 as head of investments.
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Nagle identified the supply of medical devices to the healthcare sector as a potential consolidation play. By the end of this year, Sicon will have completed three acquisitions, but it is unlikely to stop there.
“It is pretty clear that we want to build scale,” said Nagle.
The timing is right to do just that. The typical targets of family money are businesses that are about 20 years old and where managers are thinking of succession. They want to “take some money off the table”, but not necessarily play golf five days a week. Neither do they want to send former colleagues to the scrap heap.
“We are seen as a safe place to put the baby,” said Nagle. “What it boils down to is that family companies like to deal with other family companies.”
It is understood Gowan was not the top bidder for Senator Windows. The supplier of upmarket windows to the home- improvement market was courted strongly by powerful players in the building-supply sector.
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“Money isn’t always the only issue,” said the Gowan managing director, Michael Dwan. “Our focus is primarily diversification, rather than straight private equity. We take a longer-term view; we are not looking for a quick flip over three to five years like private-equity players. We are looking at building businesses, and that appeals to owner-managers.”
It is clear, too, that the current spate of acquisitions also represents a new direction in investment strategy on the part of the family firms. At the turn of the millennium, companies such as the Gowan Group, O’Flaherty Holdings and Sicon held significant stock-market investment portfolios.
For example, Gowan’s ultimate parent, Convest, had a stock-market portfolio worth more than €30m at the end of 2001. By the end of 2005, that had fallen to zero.
O’Flaherty Holdings, distributors of Volkswagen and Audi cars here, invested more than €7m in Charles Schwab at the height of the dotcom bubble, part of an extensive portfolio. Its total listed investments at the end of last year were valued at less than €3m.
What the family firms do possess is “readies”. Sicon ended last year with €272m in cash on its balance sheet, having realised some €68m from the sale of investment properties in the year.
Gowan finished the year with €49m of cash on its balance sheet, after raising €22m through property sales.
Stafford Holdings also tidied up its balance sheet in 2005, selling non-core assets such as the Glenview hotel in Wicklow, its share of the St Helens Bay resort in Wexford and an oil tanker business in Wales.
For all the families, the new businesses will compete for investment with dedicated investment-property subsidiaries. Stafford recently purchased the ESB building in Dublin’s Fleet Street for €33m. But there is plenty of scope and cash for both.
THIS week, Mark Stafford will undertake a tour of central and eastern Europe, snouting out sport retailers. Stafford says he is not that interested in deals of less than €50m. “It takes nearly as much time to do a €50m acquisition as a €5m one.”
These are old companies with young executives in a hurry. It may sound like testosterone-fuelled, masters of the universe stuff, but Stafford is keen to stress these are investments for the future. “My shareholders are my 19-year-old sister and my parents,” he said.
Like his peers at Gowan, Sicon and Barry’s, Stafford is not giving away the family silver. He is just polishing it.
The family way