Mears Group: Bob Holt
AIM company of the year, maintenance service business Mears Group, would not be where it is, were it not for public sector contracts
Bob Holt recognised that potential when he bought out the owner of the eight year old firm for £50,000 in February 1996 and turned the business from debt to serious credit.
By October that year the small private company listed on AIM, raising £1m, and Holt began his programme of remodelling what he describes as a ‘recession proof' business where odd jobs would always need doing. Now around 60% of turnover comes via maintenance services to social housing and central government sectors and the Group has a solid 8% of a highly fragmented market through partnerships with more than 60 local authorities.
Holt's background in building small public companies and a long-term approach have helped turn Mears from a XX turnover business with £1m profits in 1997/98 to £110m in 2003, with more than £5m profits, along the way recording an annual compound growth rate of 42% since listing. He recognised that AIM could offer funding on the balance sheet, profile, and currency for acquisitions, all of which he felt were key, particularly in Mears' sector.
It was no hunch on Holt's part. “I'm an avid student of support services and the sector. I'm in tune with political demands and changes and we keep our ear to the ground. What we did for the first few years was keep our head down,” he says.
He laid solid foundations, forming relationships that would yield long-term partnerships, typically contracts of five years plus, rather than short term gain. Its order book boasts £400m worth of contracts with deals stretching as far as 2012 and it claims an excellent record of renewals. “Although the sector is huge and expanding dramatically, we haven't grown as big as we could have done. Size is not the issue. I'm not interested in one-off jobs. There have got to be sustainable returns for all the stakeholders,” he says. Holt chose to grow at a pace the Group is comfortable with. He has gradually introduced additional services, such as decorating and fleet distribution as well as acquiring businesses in the sector, such as Scion, the facility services group, and expanding to new territories. This was achieved out of cashflow and not returning to AIM or borrowing.
His top-end priority is to make Mears a £150m market cap business within two years and Holt expects the company to make a series of acquisitions, primarily of public sector businesses, in that time. “There is such a long way to go. We're at the start again and already geared up for £200m through developing our people in good time.”
New market: Growth in public sector spending Company: Mears Group Founded: 1988 Focus: Building maintenance services Owner-manager: Bob Holt Key factors: Market knowledge; government pledge; AIM listing; long-term contracts; partnership approach Turnover: £110m