Special Report - Contract Scotland: The seller

DeeDee Doke looks at the MBO on behalf of the seller

“The most important thing for me was legacy,” says Colin Woodward, who earlier this year handed over his Stirling-based Contract Scotland recruitment business to three long-time associates. It was a long-planned move, delayed by the Covid pandemic.

“I guess it was a long-term strategy and approach to make sure that the business could be safely passed from me to the next generation of owners,” explains Woodward, who founded Contract Scotland’s forerunner, Contract Construction in 1990. The business was de-merged in 1998, with Woodward taking charge of the Scottish part of the company and renaming it Contract Scotland. At that point, Contract Scotland had a £2.2m turnover and three staff. Today, the company enjoys a £20m turnover and has 40-plus staff.

The MBO “probably should have happened sooner than it did”, Woodward concedes, “but what was really important was making sure that there was continuity for everybody in the business, so nobody could be thinking that this was going to affect them in a negative sense.

“So,” he continues, “it’s been quite a lot of time making sure that John-Paul [Toner], Julie [Fleming] and Alan [Shave] are more than capable of doing what they’re doing.”

Contract Scotland’s new directors and owners – Toner, Fleming and Shave – joined the business as graduate trainees. “All of them came in at the bottom,” says Woodward.

Asked when he knew that they were the right ones to eventually succeed him at the helm, Woodward responds: “You can see people develop – you know what they know, you know how they learn and their style of learning, and how they thrive with the more responsibility you give them. When you realise you have people with that potential, you look at what could be the next challenge.”

He adds: “I’ve a lot of respect for them; they’re still young enough to bring on their own ideas and they’re experienced enough to know what they’re doing.”

Woodward had already started to step away from the day-to-day running of the business well before the onslaught of the Covid pandemic to focus on building his management consulting venture, Coresco, and move toward his exit. He was also planning to move his family to England. But as the pandemic shattered his plans – along with those of much of the world – Woodward returned to Contract Scotland on a “pretty much full-blown capacity” from March, with the MBO plans on hold.

“We had to make sure that we understood where we were, what the risks were, what the opportunities were. Navigating that period where everything was uncertain was quite a difficult one,” he recalls. “We got to August, September, and we could see what things looked like and how things were going to progress. That’s when we got the discussions back online and just said, ‘Well, let’s just pause this for a while.’ Once we got through that stage and realised that we could start to plan more than a few weeks ahead, we started to move the discussions on.

“Another advantage, I guess, was that there wasn’t as much recruitment activity, and in construction we were coming towards the end of the year, which is always a bit quiet, which gave JP, Alan and Julie a bit more time to think through what the MBO was going to look like,” Woodward says.

Unlike many MBOs, the arrangements worked out to shift Contract Scotland’s ownership from Woodward to Toner, Fleming and Shave were not complex or hard-fought. The parties all have agreed to not discuss the terms, but Woodward says that all four had “a clear understanding for the valuations of the business, the opportunity to map the valuation… so there wasn’t really much in terms of negotiations needing to be done between us because we were all friends as well as colleagues.”

Woodward adds: “So, from that point of view, it was pretty seamless. I knew what I wanted and the other guys knew what that was. It was really just a case of trying to get from where we were to where we wanted to go. Fortunately, that happened pretty quickly.”

Following the MBO’s March 2021 completion, Woodward and his family are now in Exeter. He is still in contact with his former colleagues/friends, but they have not come to Woodward with questions. “If they did,” he says wryly, “I haven’t done my job.”

Colin Woodward: Food for thought

“If you stay in a business too long, you are actually going to have a detrimental impact on it. When I started in business, I had nothing to start with, so you take more risks. As you start to get a bit older, you start to take fewer risks, but the fewer risks you take will have an impact on careers progression and job satisfaction in the business. If you don’t take the risks, you maybe don’t create as many opportunities for the next generation of managers and directors. If you’re not prepared to take the risks that you need to as an entrepreneur any more, you need to get somebody else to.” 

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