As I wrote previously, I thought that Steve Crowther, UKIP’s machiavellian chairman, had made a fortune in the world of Ad agencies and marketing. He co-founded a company called April Six in 2000 and then sold it to The Mission Marketing Group in 2007 for £9.45M.
What I had not realised was that the chairman of the Board of MMG at the time of the sale was none other than Francis Maude, now Regulation finder-general and chief fire-starter to the bonfire of red tape, that this Government is so proud to crow about at every opportunity. Oh, and he also set up Policy Exchange.
It’s fair to say that under Maude’s chairmanship MMG went on a spending spree, and were proud of this approach to expanding their company, which they called “buy and build”. This is what market analysts were saying about them back in the heady days of 2007. Basically the founders had raised cash by converting to a public company in 2006, and added to that by borrowing heavily from the banks, to go on this spending spree. The company was valued at £33M in 2007, with debts of £20M. April Six founders Steve Crowther and Fiona Shepherd were paid £9.45M for their business, and this was paid partly in shares (1.19M each). You can see MMG’s share price in the chart below or for an interactive version, click here. It’s not pretty. At that time (3rd April 2007) Crowther’s shares were worth 135p a share, making his worth £1.61M. By the time Maude had left the chairmanship at the end of 2009, they were worth 24p each, making Crowther’s worth £286,000. Of course, he still had the other £3M in cash he was paid by MMG.
Decline and Fall. After MMG purchased Steve Crowther’s April Six, their share price crashed.
Two things come to mind from this microcosmic look into the impact of the deepest economic crisis certainly since the 1930s and possibly longer (it hasn’t finished yet).
1. Crowther will have lost about £1.4M if he hadn’t managed to sell the Mission Marketing shares before their value evaporated. From what I can see, he didn’t. I can’t imagine that will do much good for UKIP/Tory relations, while Maude is in the cabinet.
2. Maude’s actual experience of the private sector is limited to a series of directorships in blue-chip city banks (and Asda), which he gained after losing his MP’s seat in the 1992 election; and a series non-exec chairmanship and director roles in addition to MMG, many of which were in the PR world. Maude will have been involved in a number of companies whose value disappeared during the Crash. Did he have to take any financial penalty as a result? Did he suffer like so many employees who lost their jobs, found themselves unable to pay their mortgages, because of decisions made by people like Maude? Of course not.
Now, Francis Maude is hell bent on a Mission of his own, to dismantle public services, to remove regulations that protect public interests; and to “shrink the state”. Presumably he believes that the private sector does things so much better, because the market is king.
Here, he talks about privatising the NHS, by setting up employee-owned mutuals. Mutuals that, like academies and free schools, start life being gifted public property and provided with subsidised public services.
The story also reminds me of another non exec chair – Matt Ridley, who presided over the demise of Northern Rock. Paid £315,000 a year for his Northern Rock chair post, Ridley was lambasted for being asleep at the wheel while Northern Rock went on a massive borrowing spree just when global money markets collapsed. Curious why Northern Rock took on a scientist as their chair? His daddy, the 4th Viscount, was chair of Northern Rock from 1987 to 1992.
Matt Ridley is now visiting scholar at Policy Exchange.