Pierre Sussex was as stealthy as a Highveld thunderstorm. He walked his factory several times a day. He liked to keep his machine minders on their toes.
Each one had a schedule to work to. Pierre had worked out the best number of parts each machine could produce per day. “Local-efficiency” was his watchword.
Clipboards hung from the corner of each operator’s workstation. He designed reports so that he could run his finger down the last column at any time of the day, and pass comment.
Pierre regarded himself as scrupulously fair on his staff. As long as they agreed with him. Prayer time took place during tea time, Every day. “It keeps everyone focussed on not cheating me out of the time I pay them for”. He limped down the aisle between machines lined up in the factory.
Every machine with its own local efficiency. “Keeping machinery and operators on the move maximises my return on investment.
“But now it is time. I am 82 next month, and I have put this place in the right frame for a sale. My son agrees with me. And neither of us want to share the business with a black partner. He only holds 12% of the shares, and if we have another partner move in with us, then he will be a minor shareholder. With a boss who is not his dad.”
We walked into the warehouse. “Take a look at all this stock,” he said. “Efficient machine use and output justify their cost. My people must work. The stock must build up. We will always be able to sell the finished goods.
“We have a part for the battery of every single car which exists on the continent, right now. Nobody else has that. And our customers don’t like to hold stock, so we hold it for them. I will have to build on to the warehouse next year because we will soon fill this one. I put all my profits into stock. If we have a prolonged strike, we will be the only people on the continent with the right parts.”
On a wing and a prayer
We trundled off to the boardroom. And a prayer. Pierre was big on his prayer sessions. “We make specific parts for the internal part of a battery. They are very specific to each battery size. But our market is opening up now. The new batteries required for the new electric vehicles will all require our parts.
“No, I don’t have any fitted beyond the prototypes right now. But this technological wave is moving fast in our direction. I think we have enough finished parts in the warehouse to supply for a year without having to turn a machine. You know we are in for big political and social upheaval in this country. It is not the same wonderful place I grew up in. I worry for my grandchildren.
“Anyway, here are the financial statements. I want 200M for the business, and then we can talk about the property as well.”
I put my head into the accountant’s office. “Any chance you can get these to me on email?” I asked. We stopped using paper in our office five years back. It had become a nightmare of control issues over clients’ private papers. The risk of fire, and the sheer storage space required, notwithstanding. We prefer electronic storage.
But back to Pierre and his business. He was a new client. He was 82. He was also an old client. He thought it was a good time to find another owner. He wanted us to manage the process. We had done so for a family member of his two years before.
He was also stuck on the 200M. And that was a problem. Our job is to manage these merger, acquisition, and disposal processes. We have been doing so since 1991. That is a long time in which to learn what works. The stuff which does not work fails for business sellers almost daily.
So there I sat with a hopeful business owner. He had a target upon which he had based his entire retirement planning. He was secure in the knowledge which closeted his own perception of value.
But he was wrong. And that is devastating to a person who wants to get back in the saddle on a farm in the Western Cape. He was tired of the staff, and the sirens, and the stock control, and the late payers, and the approaching social upheaval which he believes is coming.
He was wrong in as much as his business is not worth anything close to 200M. It is not even within striking range of that number. But he has believed for the last decade that this is exactly where he would step off the tram. He has not once, asked for a proper opinion of the value of the business.
Had he done so, he would have been able to adjust his expectations and those of his family. But more likely, he would have been able to address the weaknesses in his business. He may have been able to turn the weaknesses to the benefit of his future.