Be Careful What You Wish For (7 page)

I met John Barton, their MD, and secured an additional £3 million, paid in four instalments. I was hedging my bets that we could deliver, we were only currently doing 15,000 connections a month on all networks – i.e. 45,000 a quarter, not the 50,000 per quarter required to just service this one deal with 121. But as I projected we would be opening a further forty stores by the middle of 1999, I gambled on delivering.

As we signed the agreement, John Barton said to bear him in mind should I ever think of selling PPS.

Problems started to surface with Vodafone Connect, who cut our commissions. So in a counter-measure, I decided to switch connections to 121. Within days connections to Vodafone were down 90 per cent. Once again, I was flexing my commercial muscles, but this time I had eighty stores so the message was even clearer. Within a week Andy Smith, the sales director from Vodafone Connect, was on the phone. He wasn’t impressed and wanted the connections back; after a few weeks the Mexican stand-off abated and we had commissions reinstated.

After winning the battle with Vodafone Connect over commissions I agreed to restore their level of connections. However, there was one small problem: the 121 deal. The fact that we had a falling-out with Vodafone had half-suited me, now it was back to my mouth writing cheques that my business couldn’t cash. I was spinning plates trying to balance cash flow, open stores, give volume back to Vodafone and give 121 the 50,000 sales per quarter I had promised them. The first quarter we did 29,000. My argument was that it was still a significant rise and they agreed to pay the second of the four £750,000 instalments, thus feeding PPS’s rumbling belly with its dietary requirement of cash.

As we were powering towards our one hundredth store, I now took a greater interest in our cost base. We had been spending £30,000 on each shop fit. I employed my brother Dominic as Operations Director, which led to a considerable saving. He recruited his own workforce in house, mass-produced all counters and shop equipment, which ensured that all future shops were built the same way, and we saved a million pounds over the next raft of shops.

Opening a new shop took time, as there was always a lag between agreeing a location and doing the necessary legals to obtain leases. Dominic, when surveying shops, took the keys from estate agents and unbeknownst to them cut copies. As soon as I gave him the nod on a shop, he would use his newly cut keys, go in and start fitting shops before we had even signed leases. We amazed everybody when days after completing a lease we had a fully fitted shop and were open for trade.

By now Andrew and I were enjoying the spoils of the business. We were paying ourselves £250,000 each per year, plus all our expenses. I had two cars, a Jaguar convertible and a Ferrari, and Andrew had an Aston Martin, but despite all this he was still banging on about selling. We had a company Mercedes S class and we also had a fleet of expensive cars for department heads, area managers and directors alike. In fact, our car park at Head Office was like a showroom for German luxury car manufacturers.

We had over 500 staff and were growing daily. We employed a new HR manager and started our own training academy. Training courses were mandatory for all new employees. They were required to attend for a week and pass exams to commence employment. On average between fifteen and twenty-five people would attend the course and I spoke passionately on every one to instil
confidence
, belief and drive in my staff. Besides, I was only thirty, and I’d been where they were not so long ago, so they could relate to me. I wanted them to have my passion, determination and desire to succeed; I wanted them to be the best.

Stock management was becoming a major issue. Criminals were now targeting vans picking up stock. Three times in the space of two weeks vans with tens of thousands of pounds’ worth of stock were held up at gunpoint. And, as if I didn’t have enough on my bloody plate, the police informed me they had intelligence to suggest that I was being targeted as a kidnap victim. I had to hire security to accompany me everywhere until the police dealt with this information. I viewed this as slightly comical and laughed it off but eventually the police arrested a crew they strongly believed had targeted me.

Having spent several months looking for a finance director I employed John Davies at the start of 1999. For the first time I had someone on board who went through the finances like a forensic accountant and gave me a proper financial picture, yet it irritated me as I was used to my word being law. As I didn’t take kindly to criticism, this led to some early disagreements and almost John’s departure, which would have been a disaster at a time when we were projected to do £60 million in business and make £2.4 million in profit.

Andrew now had little day-to-day involvement in the business and had plenty of free time on his hands. He wanted to sell the business and he employed Arthur Andersen’s, one of the ‘big five’ accounting firms, to represent him in his desire to find a buyer.

I was up to my eyeballs in managing this monolith of a business that was now in excess of 110 stores. I humoured Andrew by reluctantly agreeing to meet his people. It was in the early part of 1999, and the moment they walked into my office on a Monday
morning
, all pinstripe suits and pinkie rings, I knew it was not going to go well. Their ringleader, who looked like a Giles so we’ll call him Giles, regaled me what I had to do. I listened to his self-serving nonsense and, after a deliberate pregnant pause, sent the aforementioned Giles and his mute cronies fleeing back to the City with two words ringing in their ears, and one of them was ‘off’.

Andrew extracted a solemn promise from me that I would seriously think about selling, but as soon as he left I filed it in miscellaneous and got on with the real business of building the company.

My determination and single-minded focus to make PPS successful was relentless. I was accused of being a control freak and a hard taskmaster. I think you have to have elements of the two when you are building a business.

I was driven crazy by stores’ inability to answer the phone. So I instructed every branch to answer the phone within three rings, and set up a team of customer care girls to ring the branches four times a day for a month to ensure they did – and woe betide those that didn’t. It led to a fair few verbal warnings but after a month or so everyone answered the bloody phone promptly.

Punctuality was also an issue. I wanted stores open for business at 8.45 a.m. and it wasn’t happening. I could monitor what time staff arrived through the activation of each store’s alarm, and got reports electronically produced. Stores that were late got a phone call from their MD, and if they persisted they got a call from HR terminating the staff’s employment. One store, in a shopping centre in Uxbridge, got the shop next door to open the store for them and deactivate the alarm. So one morning I turned up, waited for them to arrive at 9.30 a.m. and sacked the entire staff on the spot.
I
wanted professionalism and excellence and I would damn well do what it took to get it.

For two quarters we failed to hit the level of connections we had agreed to do with 121, and the last quarter we did 40,000 of the 50,000 required. This meant that 121 were reluctant to pay the third tranche of £750K. In fact, their finance department tried to reclaim some of the monies they had paid, but our increase in volume was still so significant that I managed to cajole the money out of them. I just kept spinning those plates!

In the middle of 1999 Time Computers approached us about a concession deal. We settled on twenty concessions and jumped up to 150 stores. We had moved into London, opening three stores in key locations. It was the last time we were to use Ulrika Jonsson. She failed to turn up on time to open one of our stores and we missed the chance to gain some serious publicity. As a result I went ballistic and when she refused to meet her legal obligations we sued her (subsequently, due to ensuing events, incredibly this action was dropped). Later, when I purchased Crystal Palace, liberty-takers being paid and failing to honour performance obligations became the norm.

Due to our size, it was becoming incredibly difficult to control what was sold in the manner I had so rigidly been able to in the past. I had eight terminals on my desk and each one monitored twenty stores. I watched sales figures religiously and when they weren’t to my liking, called meetings with the area managers and, shall we say, focused their minds in no uncertain terms. In an attempt to get figures up to an appropriate level I used all kinds of incentives, including the use of my Ferrari 355 Berlinetta to area managers with the best sales. Stephen Hargreaves, who managed our stores in the north-west, was the first winner. He drove thirty miles in the car and had an enormous crash – so much for incentives.

By the last quarter of 1999 cash flow was beginning to become critical. Again, we needed a serious cash injection to keep the business afloat. By now we had a £3 million overdraft, which we had never used, but our forecasts predicted we would eat into it and require at least another £1 million on top imminently.

My brainwave was to arrange another deal. This time the agreement was with Vodafone. We had nearly 300,000 live customers on Vodafone’s airtime and growing and were paid 3 per cent of their call spend, which roughly meant about 0.25p per customer per month, paid to us on a monthly basis. I convinced Vodafone to pay the next two years’ worth to us in one lump sum. Hey presto! £2.7 million, and the end of the cash flow crisis … for five minutes. How many plates was I spinning now? 121, Vodafone, cash flow, Andrew, stores opening …

Speaking of Andrew, he was becoming impatient and again wanted to sell the business. So, after some deliberation, in a strategic move, I offered Andrew a figure for his share of the company upon completion of the sale of the business, and after careful consideration he accepted my offer.

So on the eve of a new millennium, as everyone else was preparing for the beginning of a new era, I was preparing for the end of one. I had decided to put The PocketPhone Shop up for sale.

In December 1999 we topped 50,000 connections. We had done in a month what had taken us the first two years to achieve. We were now the second biggest phone connector in the country and one of the fastest expanding businesses in the UK. The remarkable growth of this company in the space of just five years was almost beyond comprehension.

After I agreed a price with Andrew for his share in the company, his lawyers drafted up a formal agreement, stipulating the price for
Andrew
’s stock out of the proceeds. Other stipulations were made, notably that any offer over £30 million had to be accepted!

Andrew again brought Arthur Andersen’s into the fray and this time I decided to use them, albeit different people from the irksome ‘Giles’ I had thrown out of my office a year earlier, but on my terms. I met Andersen’s, who were aware of the proposed agreement between Andrew and me and its stipulations. I spoke in detail about the market and who I believed would be the likely buyers. I discussed their fees and made it clear that the bigger the sales price they achieved, the bigger percentage they would get. It meant that I could be in breach of Andrew’s stipulation that the business must be sold at offers over £30 million. But I didn’t care, and neither did they.

Selling a business is a protracted and often nerve-racking process. And whilst I had made my mind up to sell, it felt strange: I was selling something that I had put my heart and soul into.

Andrew and I barely spoke. He never came into the office again. Our conversations were short and to the point, sometimes flaring into arguments. As far as I was concerned, Andrew was in no position to make demands. As long as he got what he wanted, everything else was academic. I was not going to engage in petty conversations and arguments with him.

In February 2000, once the polished sales document was complete, I suggested Andersen’s should approach Orange, Cellnet and 121, leaving Vodafone for another day. A quick timetable was mapped out. Documentation with interested parties by middle of March, indicative offers end of March, and final offers mid- to end April. There would then be an exclusivity period to allow the preferred bidder to perform due diligence, and completion by end of May 2000.

As the documents went out, I then told the Andersen team exactly who would buy it and for how much. I predicted it would be 121 and for north of £60 million. I told them of the conversation with 121 fifteen months earlier, when John Barton wanted me to tell him if I ever decided to sell.

In March we got three offers: Cellnet for £35 million; Orange for £40 million; and 121 for £40 million. We were now in play. All three exceeded the £30 million I was obliged to accept under the agreement with Andrew. As these were indicative offers, Andersen’s and I decided not to accept them. We also agreed that this was something that Andrew did not necessarily need to know at this stage.

Andersen’s went back to the bidders with a risky strategy to demand more. It was a gamble I was prepared to take because I strongly believed the business was worth more than what was on the table and Andersen’s agreed. Of course they did – their commission structure told them to.

Cellnet dropped out, to no surprise to me – we never had much of a relationship with them. Orange came back with £45 million and 121 with £50 million.

I decided to inform the other directors where we were at with negotiations, as individually they would profit from the sale. This was a mistake as, with the exception of my brother Dominic, at least two of the other directors lost their focus. I had heard of people when a business is being sold going into the ‘departure lounge’ but some of my directors were sitting on the plane sipping fucking mai tais.

At this stage Andersen’s started to panic and wanted to involve Vodafone. Their concerns increased when Orange dropped out, leaving one bidder at the table, 121. I had had a phone conversation with 121’s MD John Barton, who wanted a steer. I told him
to
get serious. Days later they came back with an increased offer: £60 million.