At a US blacksmith's convention, Ed Kirk made the deal that secured him his own business to run and also made him a fortune.
The trouble with that old Renault advertisement was that it was too damned easy. He said to her that he had decided to "go it alone". She looked worried until he said he could keep the company car. Then it was smiles all round and everyone lived happily ever after.
Life is less simple as Ed Kirk, 43-year old chairman of Frederick Cooper, the country's second largest producer of door-handles, locks and hinges, would vouch. Kirk went straight from school to Tube Investments as a trainee accountant. Eight years at TI were followed by spells at Cope Allman, Evode and Courtaulds.
In 1981, he joined Amalgamated Metal Corporation, the trading arm of Preussag, the German steel giant. Based in the City, his future seemed secure. By October 1985, he was negotiating AMC's acquisitions and disposals. But Kirk was bored; he wanted to run his own company. He was rung up out of the blue by a colleague from his Evode days: would he be interested in taking an equity stake in a small plc?
Before he knew it, Kirk was sitting down with Fred Cooper, founder of a West Midlands steel processor, who had retired from the business. He was looking for someone to buy some of his shares and, more importantly, to save the company from being wound up. In the six months to January 1986, Frederick Cooper has made a loss of £1.2 million. Kirk resigned his job, borrowed £100,000 against his house and, with some friends, agreed to pay £150,000 for an 8% stake.
First, however, Kirk had to satisfy Frederick Cooper's bankers that he was the man to stop the rot. Barclays, the company's main creditor, went through his career history. It was then, he says, "that fortune played a major part". By chance, the Barclays man knew someone who had worked at Courtaulds at the same time as Kirk. "He rang the bloke up; he gave me a glowing reference, thank goodness, and I was on my way," says Kirk.
But Kirk was given only six weeks to come up with an acceptable business plan before the receiver was called in. "Six weeks to save my £100,000," recalls Kirk. That was on 31 January, 1986. Within two weeks he had got rid of all the board but two and had completed a review of all the group's businesses. But it was not enough. "I did not bother writing a business plan because it was so obviously futile. I needed to find a way of righting the business rather than waste time putting pen to paper."
He did two things together. First, he looked for an acquisition which would offer a steady income stream. Second, he decided to make a disposal. The subsidiary he targeted was the Cooper Horseshoe Nail Company. With its main market in America, Cooper had been hit by a falling pound. By chance, the annual blacksmiths' convention was about to take place in America. All the main horseshoe nail manufacturers would be there. Kirk phoned Mustadd of Sweden, Europe's No 1 and arranged a meeting "to talk about marketing tactics - because we were cutting each other's throats".
On 3 March, 1986, Kirk flew to America. He was four weeks into the six weeks' deadline. The meeting took place at Cooper's distributor in Connecticut. Kirk set out for the Mustadd men a grand plan for Cooper. "I told them that so far all the volume in the US had been generated at a low price. I was going to lower my prices to carve out a huge market share. Then I would firm my prices up again." He adds: "It was, of course, all baloney."
The Swedes first said they would fight him then asked if Kirk would consider selling the business. "I said I would sleep on it," says Kirk. The next day, they met again. Kirk put a high price tag on the company: £2 million, for a business that had lost £174,000 in the previous six months. The Swedes forced him down - but only to £1.7 million. For Kirk, it was a stunning triumph. At a stroke, Frederick Cooper's borrowings fell from £4 million to £2.3 million. The company was saved. A few weeks later, Kirk made his first acquisition, paying £400,000 for a company that was making £100,000 a year. "I'd got rid of a business that was losing £300,000 a year for £1.7 million and bought one that was making £100,000 a year for £400,000. That can't be bad." This year, Frederick Cooper will make profits of £4 million. Kirk's £100,000 investment is now worth £2 million.
Chris Blackhurst is City Editor of the Sunday Express.
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