100 days ago I bought the assets, headquarters, contracts and goodwill of McGill, a Scottish building services and construction company based in Dundee. A company, that after 37 years of trading, was put into administration on 1st February 2019.
Having grown up in Dundee, McGill was always there. When I heard the news, that McGill was to enter administration with 80% of the workforce immediately made redundant and the remaining 20% employed to support administrators wind up the business, I immediately made contact to see what could be done. Since being announced as the preferred bidder and subsequently acquiring the company on March 11th, I am yet to meet a single person (my family and friends included) who thought it was a good idea to buy McGill!
I started investing in property relatively early and bought my first house in Kent when I was in my teens. Over the past 15 years my wife Leanne and I have grown our portfolio into one of the largest private residential portfolios in the UK…so I’m not a complete newcomer to the building sector, but in all honesty, it is irrelevant! The building industry is full of companies who are managed or owned by exceptionally experienced and qualified operators and tradespeople and just look what is happening to those businesses…administration, job losses and closures on an unprecedented scale! Look at the warnings in the last week issued at Kier and the demise of the Shaylor Group to name a recent few.
So, why did I buy McGill?
McGill have delivered some exceptional work across the country over the years and have a recognisable brand, and strong reputation. Plus, owning a large portfolio of property comes with its challenges. The biggest challenge (by far), is the availability of quality contractors…this is what cemented my interest in McGill!
The past three and a half months have been as eye-opening and exciting as they have been shocking. The following are my views and learnings after 100 days at the helm of McGill.
99 days ago, I was the only one here. I was handed the keys to our offices and set about building a team to re-ignite this business and set us on a new path.
I hand-picked a new board of directors. 5 vastly experienced, proven-to-be-successful guys, who I would soon task to kick the business into shape and drag it in a new (and much more profitable) direction…my kind of guys, joined me. Some raised eyebrows to the fact the board was almost entirely people from out with the construction industry…this was no accident, the team know how to run businesses, I don’t expect to see any of them on the tools.
We rationalised from 10 departments to 3 and booted every inefficient process, system and excuse out of the door. Our team identified the most profitable contracts and started to meet with our customers and suppliers to re-build confidence in McGill and demonstrate how different this business was going to be.
The board kicked off a huge recruitment drive to find us the very best in the industry, we weren’t about to invite the wrong people back into the company when we had an opportunity to build the best team! If you don’t want to be the best or work with the best team, don’t apply for a job with McGill there are many average companies out there.
We have taken full advantage of our downtime in the early days and invested heavily into market leading IT systems, which will drive efficiencies across the business and improve margin and profitability. This appears to be a major failing in the industry, that it is stuck in the 80’s when it comes to technology! Inefficiencies across the entire operational part of the sector including purchasing, stock management, recruitment, logistics, finance, sub-contractor management, has led to the erosion of margin on a catastrophic scale. The IT solutions to these inefficiencies already exist in the market, you just need to look for them. Our significant investment in technology and IT we believe will set us apart from our competitors for years to come and will allow us to interface with many private and public sector clients to improve efficiencies for all.
As an outsider to McGill before February, I was always in awe of the size and scale of the operations of the business, not least of all the impressive tally of 440 people employed by them. As nice as it is, we can’t measure success on the basis of how many people you have directly on the books. We have fundamentally shifted the mind-set of our team and strategy for growth to include the development of a network of sub-contractors who will make up a large % of our total pool of operatives. We don’t need to employ everyone in house.
Since engaging with the administrators in February I have met or spoken with over 200 business owners and managers within the sector, and what shocks me the most is that no-one, without exception, has talked about profit or cash-flow. The sector fetishizes turnover! It has become the pissing contest between operators, a mine’s bigger than yours mentality, where in reality it means nothing if you aren’t making profit and don’t have the cash to fund the running of the business.
In my list of what’s wrong in the building sector, there is one clear winner…this obsession with turnover, without a focus on delivering profit. From a quick look through my LinkedIN feed, it seems common practice for the big companies to pitch ridiculously small or even negative margins, just to win contracts... they must have huge cash piles to support this strategy?... for the rest of us, it's suicide! The operatives delivering the work are then micro-managed and incentivised to work faster but the margins simply aren’t good enough at tender stage to turn profit on some of these big contracts. We have been bullish with our rates and fully expect to lose contracts that McGill would have won before, and we are OK with that, we plan to be in business for the long term!
In acquiring McGill and leaping into a sector that I had little experience in running a business in, I knew I needed a quality management team, unsullied by experience in the industry. Our hand-picked board are supported by experienced on-site operational management and quality and passionate operatives on the tools. My ethos in business is to work with the best, and to pay them accordingly!
Our team have already delivered on our short-term commitments to save the business, get back on site with profitable and sustainable contracts both in the private and public sector and position the company to where we can accelerate growth through our newly implemented market leading IT systems and infrastructure. We have put in place robust cash structures that allows us to grow quickly with the necessary cash to support this growth and we continue to build an enthusiastic and driven team. Our new business structure is already in a far stronger position than what McGill was in for years imo. Our customers, staff, suppliers and all other stakeholders should take heart and confidence from that.
To support the next phase we will be announcing some further experienced industry senior level management appointments over the next few weeks.
Getting back to an earlier point, do I think buying McGill was a good idea? Absolutely!
In my other roles as an employer of contractors I know first hand the importance of having quality, experienced, reliable, efficient contractors. As an employer it is not in my interest for these contractors to go bust, we need them to be managed well and make a profit which can then be reinvested in new technologies etc to improve for us all and be in business for the long term. I am sure most employers would agree with that.
McGill is a fantastic and well-established brand within the sector, has a strong reputation and experienced employees, all of which will be leveraged with the right direction and focus, to rapidly grow into a major player in the market again!
Since 11th March we have pieced together a passionate, experienced and expert team, built and re-built new and existing partnerships and re-positioned McGill where we can really accelerate growth and maximise opportunities. Our work has only just begun.
This is McGill. This is a better McGill. This is our McGill and I’m even more excited now than I was 100 days ago! Looking forward to the next 100 days 😁
Chief Executive Officer