As UK property loses its gloss, one business continues to build value in this space. Jyoti Banerjee met up with Chris Oglesby of Bruntwood to learn how its long-term thinking has enabled it to succeed where short-term profit-seekers have lost out.
Bruntwood was started in 1977 buying out old industrial property. In the 1990s, it decided to move into the provision of office space. Chris Oglesby took over the running of the company from his father Michael who was the founder. Today, the company employs 450 people, up from twelve in the early 1990s, and has converted an initial investment of £50,000 in 1976 into a net worth of £330 million.
Over the company’s life, it has experienced growth of over 20% per annum. Typically, the funding for this has come from banks as private equity funders have been much more aggressive in their demands. However, there is a new stream of funding entering the market. As Oglesby points out, “The main change in the market is that annuity funds are entering it and they are long-term lenders. The fact that we are a long-term family business gives us a good position in that market.” As a result, Bruntwood has recently agreed a £130 million debt facility from a life fund.
“Family businesses, when they are good, are one of the best forms of ownership,” says Oglesby. However finding equity finance that is matched and aligned to our family values is difficult.”
A different model
What Chris and Michael Oglesby have built is a company that understands its position in the communities in which it operates. It’s found a property model that works for regional cities in the UK, such as Manchester, Leeds, Liverpool and Birmingham. In each of these cities, it is a leading provider of office space.
But it is more than just understanding the market that serves Bruntwood. The values it brings to each regional community is important as well. “We participate in the Local Enterprise Partnership where we are based. Our people are involved with sixty external civic and charitable organisations in the cities we work in. I sleep very soundly knowing that the contribution the business is making to the broader community is very significant,” points out Oglesby.
The company’s growth was checked by the 2008 downturn, when its revenues dropped 20%. Although the business is back to pre-2008 levels, there were dark moments when Oglesby and his team thought about reining in the commitments the business has made to its local communities. “Each time we chose not to,” says Oglesby. “The way we do business means that we have to be true to our values through the difficult times. If anything, this is even more important.”
Oglesby likens the way the company works to a game: “The way you play it is important. We are in it for the long-term. What the company stands for is important to us. The team is important to us.” Which may be why Bruntwood does not offers bonuses to its staff, but allows all staff to share in an allocation of shares in the business. As Oglesby explains, “Research shows that bonuses do not support superior sales performance. If you recruit the right people who buy into the bigger picture of what you are doing, the success of the business works as a motivator.”
Bruntwood has discovered that employing people who come from non-family companies can require a reset in their expectations about work. Bruntwood found that a number of its competitors did not invest in training their staff and responded by increasing its investment in people capital, making it a strategic priority. As a business that differentiates itself on service, Bruntwood has chosen to look after its people, on the basis that service only works if the staff feel cared for.
This attitude of care at Bruntwood carries through to the local community. A quarter of the business is owned by the family’s charitable trust which focuses its giving in the local community, strengthening the contribution that Bruntwood makes to society, and creating trust in the business.This case study is drawn from M Institute's recent report on Sustainable Value Creation, published by the Institute for Family Business.