When the helmsman gets a call he cannot refuse, it can be tough on the survivors.
When Robert Maxwell went to meet his maker, it wasn't just Peter who measured his worth. The impact of his death on the share price of his two public companies was no less dramatic, as bankers and shareholders weighed the scales.
Liberated from the all-pervasive Maxwell factor, shares in Mirror Group Newspapers almost doubled in a week. Conversely, shares at the debt-laden Maxwell Communications Corporation went into a tailspin which Kevin and Ian tried desperately to reverse in full public view.
Entrepreneurs are as a rule a pretty tough breed, but the past decade has seen at least seven major figures die while actively engaged in their business. In the table below we show what happened to the share prices of the other four companies which were publicly quoted at the time of demise.
At Grand Metropolitan and European Ferries, confidence in the succession was reflected in a slow but consistent rise. Sir Maxwell Joseph, the man behind Grand Metropolitan, was already planning his retirement when he went to the great hotel in the skies. On his death in September 1982, Stanley Grinstead, a colleague since his very first years as the proud possessor of a bombed-out B and B, picked up the tea tray, ensuring a smooth transition which elicited the City's continuing patronage. A year later the share price had climbed by 20%.
European Ferries was equally fortunate in having Kenneth Siddle to call on when the ebullient Keith Wickenden was killed in an air crash. Immediately after Wickenden's death, in July 1983, trading was sluggish, while the markets waited to see how Siddle could steer; when the results were announced several months later the share price had barely budged. A year later the new chairman had proved he could chart through the shoals and the share price had risen by nearly 25%.
At Stock Conversion, the post-war property company set up by Robert Clark and Joe Levy, the demise of the chairman sent shares through the roof. When Clark died in November 1984, the FT saw opportunities for new and more creative blood'. The possibility of a takeover bid was further good news in the eyes of the market. The share price soared by 30p in the space of three months and by some 30% in the following year. Not surprisingly, the Clark family chose this point to cash in their stock and walked off with a cool £58 million. Bricks and mortuary proved a profitable mix.
It was a very different matter when John Foulston, the controversial co-founder of Atlantic Computers, was killed in a car crash on the Silverstone circuit. The sudden loss of its chairman and chief executive set Atlantic on collision course. Shares slid from 729p to 440p, losing a third of their value in only one month. A year later they had still not recovered, though they did slew back from a low of 337p, and in October 1988 the company fell to the clutches of British and Commonwealth. Soon afterwards the B and C bite was looking more like a boa constrictor's last supper, and the £416-million price tag the least of the merchant bank's woes. Eighteen months on from its acquisition, Atlantic was in the hands of the administrators, while B and C faced a Formula 1 pile up all of its own.
Of the two private companies which saw their founder sent prematurely to stand by the pearly gates, Charles Church, had it been public, might well have endured a similar fate. The winged builder whose spin in his Spitfire brought him to earth somewhat faster than planned, had only just bought back the family firm. In a subsequent debt swap the family holding was reduced to zero. Since then the company has been hit by the collapse of the property market and subsided to less giddy heights.
Laura Ashley has also been looking somewhat shrivelled of late, but the death of the flower power behind it did nothing to bring on the mildew which troubles it now. Ashley died in a fall at her Welsh farmhouse just weeks before the eponymous company was floated in 1985. The £60 million of shares on offer attracted £2 billion of interest. Not bad for a woman who started with tea towels in a Pimlico kitchen; even better for the husband who lived to enjoy it. He subsequently found further consolation in a chateau and a French wife. If there's a moral robe drawn for entrepreneurs from the impact of a founder's death on active service, it must be: don't take up dangerous sports. Alternatively, better nor to fall, merely to slip.
This said, it seems clear that those who have recruited a competent sidekick need not fear over much for the fate of the firms they've built up. Only when a company relies on the magnetism of the entrepreneur who made it does the enterprise collapse. We may, as Oscar Wilde once observed, be lying in the gutter looking up at the stars. But the stars themselves are by no means fixed.
WHAT HAPPENS TO SHARE PRICES WHEN A FOUNDER DIES IN HARNESS.
Company 1 Day 1 Week 1 Month 3 Months 1 Year
GrandMet 204 218 221 243 245
European Ferries 76 79 79 76 94
Stock Conversion 410 410 435 442 530
Atlantic Computers 729 690 440 423 493
MCC 121 78 35* - -
MGN 631 15 125* - -
Sources: Datastream and FT All-Share Index
* Price at time of suspension on 2 December 1992