The CEO's off until the new year

December 23 - Yesterday was good.

Each new member of staff got a new employment contract from the new subsidiary we have set up to run their activity. Most of them said they'd never had one before. It's amazing how reassuring a bit of paper can be.

And now I've had enough. East is heading the on-call Christmas team. Disasters apart I'm off until New Year.

Have a good Christmas. Let's hope we all survive 2009.

* * *

December 22 - It was the Christmas bash on Saturday.

And I can honestly say it went well. Like most managers I dread these things. I can't say no one got a little tipsy: they did. I can't say all was innocent. As seems usual in this place at least one relationship I was previously unaware of became apparent.

But no one disgraced themselves. A good time was had. My wife thought it much better than usual, although (or maybe because) she spent much of the evening counselling my PA (who was without partner - apparently she's elbowed him because of his reaction to the now lost baby - something it was useful to learn).

And I did the now requisite 'manager's dance' where a fool, is made of those in the senior management team. For AM and Hitchin this was a first - he really can dance, much to my surprise (there's no Strictly on the horizon for me) and the AM was much more glam than I had appreciated - which was a bit of an eye opener - but all was done in good humour.

This is all going too well. I'm expecting a problem soon...

Today AM, Newc and I seek to speak to all the new staff on a one to one basis - it seems very important pre-Christmas.

And then that's nearly it.

I admit, I'm looking forward to the break.

* * *

December 19 – We signed. The deal is done. Newc signed for the vans 30 minutes later.

I saw the new staff this afternoon.

I assured them we had no plans for redundancy.

And that they were getting new vans.

I was, once more, a popular man.

What a great way to approach the end of what has been a very strange year.

* * *

December 18 (posted 19th) – There are occasions when I am completely taken by surprise by life.

This afternoon my wife called saying I must be home on time as we had been invited out to drinks by a friend of ours (hers, let’s honest) and she’d arranged a baby sitter and we were going. I was a little surprised but at 5 my PA (back, and seemingly in better form than I expected) came in to remind me I had to go (as she’d been briefed by my wife, she said).

So I dutifully, and with some moaning, went home by the required time, changed as told into smart causal and was then advised by my wife she was driving (which was rare) as we rushed out past some children moaning we always left them with their Granny, and one who feigned indifference (the current vogue).

I was more confused to find we were clearly not heading for the destination I anticipated but was instead taken to a hotel. There my wife directed me to a room, where the entire senior management team of the company (less North, who has the virus that is plaguing so many right now) plus my PA (a nice touch) and partners (as appropriate) were assembled. For the first time in my life (that I can recall) I was the subject of a surprise party.

I was (as the saying goes) gob-smacked. The assembled company, addressing me through East and Newc, wanted to thank me for what I’d done in 2008, including seeking to include them in a buy-out and then having the courage (as they saw it) to lead them out of it. It was their opinion, they said, that I’d probably saved all our jobs as a result as the debt burden would have crippled us. And they wanted to say thank you.

I was stunned. I was even more stunned when they presented me with gift to express their thanks – and one clearly chosen with care for the relatively new hobby my eldest and I are currently thoroughly enjoying together. It was generous, touching, made me feel ten feet tall and at the same time very humble to work with such a great bunch. Indeed, it almost made me lost for words (but as they teased, not for long), and was a really good evening I’ll cherish for a long time to come.

* * *

December 17 - As ever when dealing with vendors of businesses who have no appreciation of the dark arts of buying and selling such things, today was one of massive frustration as the vendors of the business we're buying refused point blank to agree to the limited warranties we are asking for given we are buying a trade, assets and liabilities and not a company. Heaven help us if we'd had tax warranties to deal with!

Their argument was they'd shown us their books and records, and that was enough. Thankfully, we left it to their solicitor to point out it was not. But this took time and at one point I began to believe we could pay more in legal fees for this deal than we might for the business.

But there was light at the end of the tunnel: with minor changes the warranties and disclosures were agreed.

I think we'll complete on Friday now.

* * *

December 16 - The first Christmas bash done, in the North.

I joined them for a group training session this afternoon, which was basically on what we're trying to do now, what sales opportunities we're looking for and what 2009 will (we hope) bring - which as far as I'm concerned is an offer that we'll try to keep everyone in employment, and at present I can't see why we won't succeed, and then I joined in for the beginning of their bash in a hotel before catching the train back south (and am now on the train home - thank goodness for mobile broadband).

The main office bash is on Friday. I always look on these things with trepidation - for those who want to know why read December 2003 and you'll realise the transformational effects of these events - but they're useful in a way. Usually they're the last obstacle to be got over before Christmas.

Tomorrow, I gather, it's a pre-completion conference on the business we're acquiring. I'm presuming it will throw up no surprises.

* * *

December 15 - Our lawyers have said yes to our drafting, done yesterday (with the odd change to justify a fee).

Now, will the other side?

After all that has happened this year, and the failed buy out, it would be nice to finish with a deal done.

Office has pointed out a conundrum though. If we complete on Friday do the new staff get invited to the Christmas do on Saturday?

NO! I said. Enough is enough.

* * *

December 14 – Late Sunday (OK, posted Monday), and it has been a pretty full working day.

As Friday developed it became clear that the business we have been offered is ours pretty much for a song subject to us accepting liability for all existing staff and the two potential industrial injuries, which we have had assessed by our lawyers and where the liability risk looks to be quite low. So subject to full disclosure of all facts on these cases having been made, with liability limited if it has not been, this business is ours.

Normally I would not rush, particularly before Christmas, as errors are always more likely when things are done too quickly, but one of the obvious problems of the business we are taking over is its van fleet. We take some pride in our vehicles, make sure they look good and are clean, and we have repairs dealt with quickly (and since we made staff pay the insurance excess where it was clear they had been careless have had many fewer of them).

The vehicles of this business are best described as old and tatty. The relevance of that is that Newc got onto this aspect of the case and has got a fantastic deal for new vehicles at phenomenal prices if we will sign up before Christmas Eve.

But I don't want to sign for the vehicles without the business and need the vehicles if we have the business, so a degree of time pressure has been created. The result? The AM and I spent much of yesterday working at my home on the terms of the offer document. Of course we will let lawyers go over this, but in view of the need for speed we have taken the initiative and have drafted exactly what we want, and candidly think it's pretty good.

As a consequence we’re targeting a Friday completion. Subject, of course, to shareholders sign of, but I think we'll get that.

* * *

December 11 – I’m feeling a little remorseful.

Not long ago I mentioned my PA was pregnant, and I was resentful of the hassle it would cause.

She is no longer pregnant. And I regret the sentiment I felt.

She is on compassionate leave, even if only I know why.

* * *

December 10 - Debt is becoming a real issue. Some smaller customers are now moving into default positions. The pressure is obviously rising.

We have two possible reactions beyond simply taking recovery procedures. The first is to remove our kit when it is leased. We have a right to do so under our contract. I am reluctant to take this route unless essential. In most cases what we supply is either legally required or pretty much essential for compliance purposes. So in these cases we are leaning heavily on payment, but making clear that we have got the option to remove equipment and notify authorities if we so choose.

The alternative is where the client owns the equipment and we supply maintenance (which is much more common). Here we are already beginning to cancel some small contracts. We are not willing to work at the rates they include when payment is not made on time. We are advising that we will still support them but payment is going to be required upfront. We are now opening credit card facilities to handle this, something I never imagined we would need. The rates are higher than I would wish because we are taking cash in advance, but I don't care. That is being priced into the service. And I am not working for nothing.

* * *

December 8 - You've had days like this.

I had to write staff reviews. I hate doing them. I talk to people. I do it all year. But systems are systems and we do think reviews work: it's about doing them without consuming your whole life that seems to be the key issue to me. I admit, this has improved whilst I have been here. When I first arrived reviews took forever. The ex-Mrs CEO bought some system that kept Investors in People (I think) happy but was a nightmare in operation.

I admit we do not comply with such standards now. As far as I know we got no benefit from doing so (that will upset someone). And the new system is based upon what we need and no more.

But it still takes time, and it was all that time I had today excluding routine tasks.

* * *

December 5 - Part 2 - AM may have scored a remarkable first hit.

We've been asked to carry on talks next week, and she made clear this had to be on the basis of our offer and they said yes.

If so, this will be worth having. Unless we're seriosuly mistaken there's real money to be made at that price.

* * *

December 5 - It's been sheer mayhem.

We were invited to tender for a significant large new contract, undoubtedly on the basis of substituting for the existing supplier, who we know has a cost base higher than ours. But, on the other hand you don't just bid for new work at present without undertaking some pretty serious due diligence. Are they seeking to move because they are under significant financial pressure? We decided not in this case, but #1, AM and I all got into looking at their financials before deciding to go ahead with a bid. And given the size of the bid and the short-term opportunity it provided to us there has been little time for anything else.

Some elsewhere in the company have, however, been stripping equipment from a few of the sites owned by the customer that went into administration last week, all with active agreement of the administrator, who seems to have agreed our terms for continuing supply of the other sites for the time being.

And AM has been sent into bat on her own in all this, on a meeting about our offer for the new business she's been investigating, to justify what they think is the miserable price we've put on the table.

Fun times.

But at least I'm not having to think about making people redundant. That's the good bit.

* * *

December 2 - A mighty long day making an overdue visit to the North, which seems to be doing better than average for the company at the moment. The contract we rolled out not long ago, and which now underpins the work of this, our smallest division, is doing fine and there appears to be no pressure on it.

The reality was, therefore, that much of this visit was simple pep talk with a few key players, but it's also good to get feedback and drop ideas into the mix. I wondered if anyone in the North was willing to diversify their portfolio a bit and cover some of the products of our new division that AM will now be managing - which has not as yet tried to pitch in this area.

North had already suggested that one of his people might need the chance of responsibility to keep him motivated, and he was right - he jumped at this. I always like this. Developing people is one of the best things about running a company.

* * *

December 1 - AM has done a good job on the investigation. But there is a difficulty. Why are people so unrealistic about what their businesses are worth?

As I noted last week, the owners of this business have already stripped it of far too much cash. They wanted us to clear the overdraft as the payment consideration, but given that the overdraft seems to incorporate quite a lot of their mortgage they have already been set to rights on that one.

The AM has now established that the profit figures reported are, however, reasonable and that there appears to be little opportunity for cash leakage and relatively little private expenditure that we would wish to eliminate from the calculations ( or which they could claim we should do). But we have already received some feedback that they think the price to be paid should now be a multiple of this figure which would come to a price higher than the overdraft. This however takes absolutely no account of the fact that the profit in question is as stated by a partnership, and that therefore no charge for the partner's time has been included in the accounts.

This is, of course, subjective but given that no one else seems to run this business a fair value has to be attributed. AM has proposed a figure to me. We have written the logic to support it. If this was deducted from the profits and a provision for tax was made to put the accounts on an equivalent basis to a limited company and the multiplier was reduced just a little ( but not much) we would come to the price I was willing to pay.

So that is what we are offering. And at that price I would quite like this operation and it would make sense to acquire it because I think it could integrate quite well over time and provide another sales outlet which can share much of the resource we are already putting on the road.

But I will only pay the right price, which is now not a lot. AM is drafting the offer. I am not to be honest expecting a favourable response, but in this market they might be lucky to get anything.

* * *

For previous instalments of the CEO's Diary, see:

Movember 2008 [2]
October 2008 [3]
September 2008 [4]
August 2008 [5]
July 2008 [6]
June 2008 [7]
May 2008 [8]
April 2008 [9]
March 2008
February 2008 [10]
January 2008 [11]
December 2007
November 2007 [12]
October 2007 [13]
September 2007 [14]
August 2007 [15]
July 2007 [16]
June 2007 [17]
May 2007 [18]
April 2007 [19]
March 2007 [20]
February 2007 [21]
January 2007 [22]
December 2006 [23]
November 2006 [24]
October 2006 [25]
September 2006 [26]
August 2006 [27]
July 2006 [28]
June 2006 [29]
May 2006 [30]
April 2006 [31]
March 2006 [32]
February 2006 [33]
January 2006 [34]
December 2005 [35]
November 2005 [36]
October 2005 [37]
September 2005 [38]
August 2005 [39]
July 2005 [40]
June 2005 [41]
May 2005 [42]
April 2005 [43]
March 2005 [44]
February 2005 [45]
January 2005 [46]
December 2004 [47]
November 2004 [48]
October 2004 [49]
September 2004 [50]
August 2004 [51]
July 2004 [52]
June 2004 [53]
May 2004 [54]
April 2004 [55]
March 2004 [56]
February 2004 [57]
January 2004 [58]
December 2003 [59]
November 2003 [60]
October 2003 [61]