Owen McLaughlin isn’t one for grabbing headlines and column inches, so when Rupert Cornford was given the opportunity to interview the captain of the starship Enterprise he jumped straight on the train to Preston.
Owen doesn’t like a lot of fuss,” the PR said in an email confirming the interview. I can see
that. After twisting my way around the outskirts of Preston, I arrive at a small office unit tucked away in a sleepy business park. The only noise here is from the birds outside – not the buzz of a billion-pound turnover business I’d expected.
“It’s my bolt-hole away from base camp,” says Owen McLaughlin, who has just arrived in his R Class Mercedes complete with ex-special forces driver.
But he can’t avoid the fuss forever. McLaughlin is the chairman and chief executive of Leyland-based Enterprise, a support services company so vast it’s difficult to know where to start. If you’ve seen a road being dug up for repair, a telephone mast being fixed or even your rubbish being collected – anywhere in the UK – the chances are McLaughlin and his team of 14,000 staff are behind it. And that’s without taking into account the company’s regeneration and property capabilities.
Enterprise has clocked up revenues of £847m and pre-tax profits of £48.6m for 2007 and continues to perform strongly, but, for McLaughlin, the journey so far has been long. From his first break into business to the experience of private equity, his story is worth telling and he is open to sharing it.
Born to Irish parents in Morecambe, he moved to Preston at the age of four and set about following in his father’s footsteps. “I worked hard but I wasn’t bright,” he says. “But did an ordinary national diploma (OND) in construction and went to Sheffield and did a four-year construction degree.
“My dad was in the business. He was an Irish labourer digging the roads up at the time.
So that’s why I went into the sector. There’s no other reason.”
After moving back to Preston and selling ice creams for the summer, he set about finding a job. After writing 118 letters, McLaughlin landed a position with contractor Taylor Woodrow on Heysham Power Station, which was the largest construction project in Europe at the time, but left after six weeks.
“I realised the day after my induction there were 600 junior site agents and moving up the ranks would be hard,” he says. “So I joined Irish digging company ARM Construction Chorley.
It’s the best thing I’ve ever done.”
The date, so clearly etched in his mind, was 21 March 1982.
And it’s pivotal to his story. By joining a smaller outfit he was able to move through the ranks to his next milestone – equity participation in a business. After borrowing £20,000 in 1989 he got a 20 per cent stake in ARM, a telecoms and water maintenance provider, and became a director, only to find the business was in difficulty.
Having pulled ARM forward but still facing the future with an under-capitalised business, McLaughlin entered into his first private equity deal in 1994, backed by Granville Baird Private Equity Management, which stayed with the business for three years.
In 1997 ARM sold out to listed dry cleaning and workwear company Sketchley.
A weird fit, you might say, but the plan was to dump the dry cleaning business and have the workwear and maintenance divisions operating together. But the dry cleaning deal fell through, and in between profit warnings and a slumping share price, there had to be a way out.
In 1999 McLaughlin sought the help of private equity house 3i to back a £30m management buyout of the company. By this time ARM had built a strong private sector utilities portfolio but was keen to widen its reach.
“I’d seen an opportunity to move into public sector streets because ARM was primarily utilities based,” says McLaughlin. “In the January after the buyout I met Mike Hynes (then a non-executive director of Lancashire county council support services spin-off Enterprise) with a view to take him on to get into the public sector.
“But a few weeks before, he’d been asked to go back in to sort out Enterprise. So six weeks after we’d done the buyout, I went to 3i and said: ‘Do you think this is a good idea to buy Enterprise,’ and they said ‘yes’. In the summer, we reversed into Enterprise and 3i exited as part of that process.”
This was in 2000 and the company, as it is known today, was born. Having become part of Enterprise, one of the founding members of AIM, McLaughlin had reached another important milestone and was once again on the stock market. The business had diversified its clients in the public and private sector and had a turnover of £100m. Since then Enterprise has made more than 15 acquisitions and increased its activity and services. It offers support services to the telecoms, gas, rail, power and water sectors. It has public sector and international consulting capabilities as well as recruitment, property and street maintenance services. Thames Water, Liverpool city council and the Ministry of Defence are among its clients.
Its recent history includes the much-publicised take-private of the company in 2007, backed by 3i with debt from Citibank and Lloyds TSB Corporate Markets. This time the value of Enterprise rocketed to £620m after its double-digit acquisition activity in the few years before. But just like the ARM buyout, another piece of low-hanging fruit in the maintenance services sector was around the corner.
“Just before we did the deal I got a phone call,” says McLaughlin. “I was in my pyjamas, and they said: ‘Are you interested in buying Accord?’ I said: ‘No, because the timing is bad.’
“But a document came to the house at 5pm with a profile of the company and it was a good fit. We were in the last stages of the approval for the buyout and had a meeting with 3i in Preston that night. I exaggerate to say it took five minutes to make the decision. We’d spent £38m on fees and were due diligenced up to the eyeballs, so nothing needed to be done and the deal was done in six weeks.”
McLaughlin, now 48, looks older than his years. I suspect the sheer drive to be successful has made great demands on him. Yet, he is upbeat, breezy and optimistic about the future, and committed to his roots, despite having all the “trappings”. “Probably because of the humble upbringing, I am still driven, but money wise I have passed beyond my wildest dreams,” he says. “I go to the pub on a Friday night with lads who came to my housewarming. Some came to my wedding but they’re still in gangs digging. It’s what I want to do. I have been to the Sandals resort in Barbados on holiday and enjoyed it. But I like living in Preston. I live 800 yards from where I was brought up.
“I go to the house sometimes just to remind me – it’s a terrace with a tree outside.
I remember my great uncle planting that tree. I just enjoy that – and it keeps me rooted,” he adds.
McLaughlin is visibly moved by where he has come from and what he has achieved. “I don’t want the profile,” he says. “I’m just quietly doing my own thing and want to carry on living as normal a life as possible.” While it may be hard to lead a ‘normal life’, Enterprise keeps McLaughlin looking to the future. He is now poring through the company’s five-year growth plan, which started life on the back of a napkin and is now a 200-page document.
While I’m not allowed to see much of it, he tells me 2008 will be a year of development for the business, as it continues to absorb Accord and updates its in-house management software, WorkManager. He is also proud of the company’s ability to provide jobs, and plans to take on 80 graduates this year. An infrastructure plan is also set to be rolled out nationwide and 760,000 sq ft of offices will be built over the next four years.
As Enterprise goes for a record turnover of £1.2bn in 2008, and aims to push up pre-tax profits over £50m, can McLaughlin see the end of the road? “No,” he says. “If you cut yourself off, what are you going to do? We’ve just written a five-year plan and I can see 2012 and even 2017. We’ve got a great team and most of us have grown up together. The average age of the senior management is 41, so the business has a long way to go (he owns 23 per cent; 3i has just over 50 per cent and the rest is split between 200 managers).”
But while the backing of 3i represents a familiar support for the business, McLaughlin is no stranger to private equity and what will eventually happen.
“The one thing about private equity is that from the day it comes on board, you know it’s going to leave,” he says. “The money invested with us is a very early-stage fund so we’re under no pressure to do something fairly quickly, but when we do it will be done together.
One of the options will be an IPO.”
So there he is. Owen McLaughlin. Thinking ahead. With his feet on the ground. No fuss.