Ch…Ch…Ch…Changes Part Three

You may remember that a year or so ago, I was supposed to be buying a motorcycle training school, but the seller decided to do a deal with a rival bidder behind our backs, breaching the contract in the process.

A brief resume is perhaps relevant here as I recount what has happened since.

The business had been running for twenty years and was a successful school in the area. In the spring of 2017, the owners decided that they wanted to retire and would the current instructors like to buy it? As it turned out, there were eight interested parties. Two of us had concerns that this was too many. We also had concerns over that summer that one of the potential bidders was taking it upon himself to be the new boss and started to throw his weight about accordingly. What we hadn’t realised and became apparent later, was that this was because that is how the current owners saw him. The anointed successor.

As we observed his behaviour, we became more wary about our investment. I’ll give an example here. We will call him John in order to protect the identity of the guilty. John came up with the idea that the school should manage the instructors’ diaries. This was a staggeringly stupid idea. Not that I put it that way. I merely pointed out that as a self-employed contractor, I wasn’t in the business of handing diary management over to one of my clients. Not to mention the complaints I would get following the inevitable double bookings. What followed was a series of increasingly angry messages until about ten that evening when I closed the computer in frustration.

The following day, it was as if nothing had happened. And that is the problem here – John was not a completer-finisher. He would come up with wild schemes that everyone had to comply with and then forget about it by the following day. He also expected that his ideas would be put into place by minions as he wouldn’t be getting his own hands dirty. In itself, this was not a bad thing, providing this was clearly understood and everyone knew who was going to be putting ideas into practice. That, however, was not the case.

You can see here why I was getting cold feet. By April of last year, at least two of the potentially interested parties had decided to seek their fortune elsewhere or to not invest but see how things went. I still kept my options open but with increasing scepticism. I was becoming less willing to put my money down. The crunch came when John insisted that we all sign up to exclusive zero hours contracts on PAYE terms – and he did this by getting the agreement with all of the others without including me in the discussions. Guess who was the one with other clients?

That this type of contract was illegal and had been since December of 2015 seemed to have escaped his attention. For me, it was the final straw. I was not going to invest in this company with John at the helm without any fallback plan and where future directors held meetings without the full involvement of all concerned. So I left.

Then John had his temper tantrum when his first bid was refused, leaving the current owners in the lurch. Two of us – we will call my partner, Frank here – put in a rescue bid. John’s erstwhile group of fellow investors decided that they weren’t prepared to work with us. For Frank and I, this was a difficulty, but not an insurmountable problem. We could recruit. We would also reduce the size of the business and rebuild, while injecting working capital. As it was, we had enough resource to replace all of the instructors who decided to leave by mid summer anyway, so any difficulty was going to be short lived. The previous owner, rather than talk to us about his concerns went to John behind our backs and did a deal, despite having agreed one with us.

So that’s where we were last May.

I knew in my heart that things would not go well. After all, I had seen the combination of hubris and incompetence that ultimately led to a series of blunders that led to the business collapsing. I expected it to collapse. It was just a matter of when. John had deliberately surrounded himself with a group of people who were unfamiliar with running a business. Two had careers in the public sector, so by their own admission had no idea how to run an SME. He managed to convince them that he was the rock God of business and all they had to do was follow him. Which they did. Now, even I had no idea just how quickly the hubris combined with incompetence would lead to such a spectacular collapse. This man managed to destroy a going concern  in around six months. He makes Richard Murphy look positively competent.

And me? Well, I have very mixed feelings here. This was a going concern. A riding school that had a good reputation. And it’s gone. Not because of a lack of work – everyone else is pretty busy despite it being the low season – but because of the hubris and incompetence of one man and the lack of foresight from those who were foolish enough to invest with him (despite words to the wise in at least one case). They may get some of their money back – the bikes, though not worth much, might fetch a few grand. But I have no idea what the current liabilities are – rent, rates, utilities etc. At least one of the investors was relying on this for his sole income. A couple had invested pension money. It’s gone.

So, yes, I am sad. But yes, it’s difficult not to experience a degree of schadenfreude. Mrs L, if she had been alive would have said that they brought it on themselves – what goes around, comes around. She would have had a point.