Rod Aldridge's former employer Cipfa must be feeling sick. The business it sold him for £340,000 in 1987 is now worth £50 million.
Plenty of businessmen have a lot to thank Mrs Thatcher for but none more so than Rod Aldridge. Capita, the management services group he started in a management buy-out worth £340,000 in 1987, specialises in telling the public sector how to operate more efficiently. Today his business has a stock market value of £50 million. In just five years, Aldridge, aged 45, who joined his local council in East Sussex as a trainee in the treasury department, has become a multi-millionaire.
What began as a company specialising in helping local councils run their computers has branched out into poll tax collection, assisting council departments in their own buy-outs, producing Birmingham council's free newspaper, overseeing the installation of the engineering facilities in the £50-million redevelopment of Leeds infirmary, chasing up people who have not renewed TV licences and selling personalised number plates on behalf of the DVLA in Swansea.
The group, which employed only 30 people and made profits of under £400,000 in 1987, now has a workforce of 550 and should break the £4-million profits barrier this year. Much of the growth has come from acquisition. But for his best deal Aldridge is torn between the management buy-out and teaming up with British Telecom to develop a computer facilities management centre.
After qualifying as a public finance accountant, it was Aldridge's ultimate aim to become treasurer of a large local authority. But in 1972 he gave up the town hall treadmill and went to work for Cipfa, the public finance accountants' professional body. There he began to build up an array of local government contacts. Cipfa drew its revenue from members' subscriptions and anything else it could raise. Aldridge's task was to provide that extra slice of income.
In 1979, with local authorities putting their services out to tender, he set up a team to help guide them through the maze of new legislation. By 1984, the advice had moved on to putting the law into practice. "All the authorities woke up to the fact that they needed computer systems to help them do their work," he says. Aldridge persuaded Cipfa to allow him to form CCS (Cipfa Computer Services), a specialist computer consultancy. Out of 450 local authorities, 150 subscribed to his service. "It was the beginning of where we are today." But, by 1987, with private sector customers also demanding CCS's expertise, he had gone as far as he could with Cipfa. Together with three colleagues he offered to buy 80% of CCS. The institute refused. "It would be wrong," he says, "to call the discussions amicable. They weren't."
Furious at Aldridge's cheek, Cipfa dug its heels in. Aldridge came back with a final offer: sell 100% of CCS or, with the help of 3i, the venture capital specialist, he and his team would set up their own rival company. Presented with a fait accompli, Cipfa caved in and sold.
The deal was completed on Friday, 13 March 1987. The omens were not good. "We had no name and no premises," says Aldridge, "plus we'd given personal guarantees and taken second charges on our houses."
He need not have worried. From the outset, the newly-named Capita was successful. The real break, however, came with the move into computerised facilities management. In 1988, every local authority was faced with the logistical nightmare of the community charge. Capita decided to approach one of the giants in the business - BT - with a proposal to develop a system for processing poll tax bills. BT agreed and put up £4.4 million in return for 51% of the new Telecom Capita company. Capita provided the manpower and main expertise. At its base in Berkshire, Telecom Capita developed a purpose-built billing and IT centre.
In 1990, Capita bought out BT's option for £1.04 million. Now a wholly-owned subsidiary, Telecom Capita is the biggest money-spinner in the group. The one site in Reading, which Capita would not have been able to afford to build on its own, manages every conceivable form of mass processing operation - poll tax collections, large payrolls, car number plate sales and records for Companies House.
The potential for the centre, says Aldridge, is enormous. "The management buyout was the first step but the BT deal had the most major effect on re-shaping the company." As for Cipfa, he admits it must be sick, having sold a business for £340,000 only to see it grow in no time at all to be worth £50 million. But, he claims, "There is no resemblance between the company now and what we bought." His broad grin speaks louder than his words.