I have been writing about Best of the Best (BOTB) for SharePad for publication next week. The company concluded its ‘Formal Sale Process’ (FSP) the other week and, earlier this week, FSPs were launched by Renishaw (RSW) and French Connection (FCCN).
The common theme at all three shares is owner-management. William Hindmarch owns 50% of BOTB, Sir David McMurtry and John Deer own 53% of RSW and Stephen Marks owns 41% of FCCN.
Many of my shares are run by owner management, and the spate of FSPs – essentially a mechanism to co-ordinate/invite takeover offers under the takeover code (a useful FSP primer) – makes me wonder if FSPs will become an exit route for these holdings, too.
The FSP at BOTB concluded without a deal. Mr Hindmarch is 46 and has time on his side to expand his business further. But the RSW directors are both in their 80s and are selling for retirement purposes with the shares at an all-time high*. Mr Marks at FCCN is 74 and seems to have been finally forced into an FSP (and probably retirement) by FCCN’s awful performance over the last 10-plus years.
Oh, and Haynes Publishing, another owner-management business, successfully concluded an FSP early last year.
Wishful thinking perhaps, but leading contenders within my portfolio for an FSP could be:
Mountview Estates (MTVW): Chief exec Duncan Sinclair is 73 and heads a 50% family concert party shareholding worth £225m. Other family members lead a 24% ‘dissident’ shareholding (more here). I understand there are no family members lined up to take over executive duties, making MTVW ideal material for an FSP in my view.
S&U (SUS). Executive brothers Anthony and Graham Coombs are both 68 and head a 50%-plus wider family shareholding worth £130m-plus. Although a younger (50s) Coombs sits as a non-exec and yet another Coombs (30s) works within the fledgling house-loan division, neither strike me as obvious leadership replacements for when the brothers retire.
FW Thorpe (TFW): Brothers Ian and Andrew Thorpe are 75 and 71 respectively and serve as non-execs. They steward a 50%-plus, £184m-plus wider family shareholding. A younger (40s) Thorpe is a board exec, but was appointed less than four years ago and does not appear obvious leadership material just yet.
At some point the directors at MTVW, SUS and TFW will have to consider the future ownership of their significant shareholdings. Either leave them to beneficiaries, who will not be in operational charge of their respective companies, or look for a suitable buyer. Maybe those directors will follow RSW’s lead, and bow out gracefully by inviting bidders after an illustrious record of growth!
(*I visited RSW during 2019 after writing this article and briefly met Sir David. I asked whether he would be happy remaining as a major shareholder after retiring from the board, and he openly said he would instead “sell the business”. I was taken aback by his frank reply. The shares were then £39. Closed at £69 the day the FSP was announced.)