'Acquisitive' in the '80s, 'focused' in the '90s - Williams' chairman seems to have got it right again. Andrew Davidson touches a couple of raw nerves but finds this almost-icon of the City doesn't take himself too seriously
There are two things which everyone always wants to know about Nigel Rudd. First, what is the secret of his success? He is asked this by anxious young men in pinstripes over every breakfast, lunch and dinner and admits there is no easy answer. The second, which most are too embarrassed to ask, is what does he do with all that money?
Rudd, still disarmingly boyish after 47 years, shifts nervously in his seat and gives a worried 'ahem'. As founder and chairman of Williams Holdings, the acquisitive fire protection, security and building products conglomerate, he pays himself a whopping £690,000 a year, keeps nearly two million shares in the company (last year's dividend 12.75p), and is now adding to that various chairmanships and non-executive posts as if they were going out of style. So? The answer is, he's not quite sure where the money goes. 'But it all goes, you know,' he says with a laugh.
There is a lot to like about Rudd. Despite his status now almost as a City icon - the man who dropped everything to ride the '80s takeover wave and build Williams into a £2.5 billion stock-market group - he has few airs and graces and no wish to take himself too seriously. He could, if he wanted, make the leap and start appearing on programmes such as BBC1's Question Time telling everyone what he thinks about foreign policy, or running round Smith Square re-organising the Conservative Party. But he doesn't. In many ways he remains the sharp Midlands accountant who hit it rich, but stayed resolutely in Derby directing his empire. 'It's roots,' he says. 'I feel comfortable in the area where I've always lived.' He is still, of course, gobbling up companies round the world - when we talked the latest was an Italian foam specialist - but it is all much lower-profile than when Williams was the go-go stock of the '80s. Then it struck a rock in its failed bid for Racal, the electronics giant, and attracted considerable criticism for the way it presented its accounts. But it survived that, and, later, the high-profile departure of Brian McGowan, Rudd's business partner and co-founder of Williams. McGowan said he had had enough, and wanted to retire to spend his money. A few weeks later he popped back up again as chairman of House of Fraser - which led to a few raised eyebrows. But even before then, says Rudd, they had decided to change strategy. Now there are no new sectors, no startling moves, just bolt-on acquisitions that link smoothly with existing operations and one of the longest, most open set of accounts you will find in the City (the last annual report ran to 96 pages). Most agree it has been a very effective change indeed.
Sitting in the first-floor boardroom of Williams's low-key City outpost (a grimey-fronted building in, suitably enough, King William Street) Rudd cuts an intriguing figure. At times, with his chubby face, his spotless pinstripe and his tastefully expensive cuff-links he looks every inch a Square Mile blueblood. Then he will crack a joke or say something snide about another boss, and a broad grin will spread beneath the flop of hair. 'Ooo,' he says, teasing when I ask him if he has any heroes or heroines, 'you are politically correct.' He slips into a broad Derby accent. 'You have to remember, ah'm frum oop narth.' And he laughs. Suddenly he looks like a big schoolboy. But you would be foolish to underestimate him; he has, by reputation, a hard streak and one of the finest heads for figures in the land.
The story of how Rudd, the son of a Derby weights-and-measures inspector, and McGowan, whose father was an assistant company secretary, transformed a clapped-out Caerphilly foundry into one of Britain's most admired conglomerates is well-known. Rudd modestly describes it thus: they went into indifferent businesses, made them better, got a share rating, bought more indifferent businesses and continued on an upward spiral.
'It's the old Indian Rope Trick,' he grins. Everyone did it, Hanson, BTR, Tomkins. While there were a lot of indifferent companies around, which there were because of bad British management in the '60s and '70s, it was easy to do. Rudd, an instinctive deal-maker, found the targets while McGowan handled the City and the administration. The problem comes, says Rudd, when there are fewer indifferent companies left to buy, and you get so big that the market sees through it.
'What we've tried to do, having thought about it and the kind of strategy we want to pursue, is to say that Williams should no longer be that type of conglomerate. Therefore what we did was shed all the businesses that we thought were not capable of growth and concentrate on the three areas of fire protection, security and building products.' Now, he says, he has quality businesses like Yale and Kidde which he can really grow and everything is developing very smoothly and quietly and Williams isn't really like Hanson, BTR and Tomkins at all, any more.
Really? Of course, others might suggest that the change in strategy came about simply because Williams slipped up. Its £764 million takeover bid for Racal failed, its share price fell and City fans got the jitters long before one of its founders decided to go fishing. Analysts were already nervous because you needed a PhD in forensic accounting to fathom the Williams figures - write-downs, write-offs, hidden provisions - many didn't really understand what its financial health was anyway. Something had to go. Isn't the fluid change of strategy just a bit of nifty post-rationalisation?
'Some people might say that,' says Rudd, suddenly sounding rather terse. 'I'm telling you what really happened. If you look at 1988 onwards, the only aggressive bid we made was Racal in 1991, and even there we weren't just buying a business to get cheap assets. There were businesses in there that we wanted to grow. We would have made a lot of money if we had been successful but the problem with bids is that you will always win if you overpay.' Would Williams be even more successful than it is if the bid had succeeded? 'That's a terribly difficult question to answer,' he says, then pauses, almost as though he had not really thought it out before. 'If we could have got it at the price we wanted,' he continues eventually, 'we would have taken our strategy on. If we had paid more, we would have been worse off.' And to be fair, analysts acknowledge that Williams was always different in that it was running two games, the big-deal corporate side, and the hands-on management of its acquisitions. It simply switched emphasis from one to the other.
Rudd, who has a reputation for being sensitive to criticism, is not complaining now. The City swooned at Williams's last interim results: profits up 11%, operating cash flow up 5%, (adjusted) earnings per share up 12%, dividend up 6.7%. Everyone agreed that with signs of recovery now showing in Europe, with a good bag of big brands (Swish, Polyfilla, Rawlplug, Smallbone, Aqualisa, Cuprinol, Hammerite) and a sound corporate focus on its key areas, Williams, after a sticky patch, now appears to have got it right. From 'acquisitive' to 'focused' in one small bound - it looks as if Rudd is getting as familiar with the buzz words of the '90s as he was with those of the '80s.
His role, of course, has changed. 'I used to be hands-on, now I am chairman. It requires very different skills but a knowledge of the way the business works is very important. Too many chairmen don't understand how their business works.' His real priority is to make sure that the strategy of the business is correct, and to see 'the broader picture', hence his move to accept positions on the boards of other companies. The positions include chairman of Pendragon, a Derby-based motor-retailer that was once part of Williams until it was floated on the London Stock Exchange as an independent company in 1989, chairman of the East Midlands Electricity Board, and of Derby Pride, the company formed to administer the allocation of finance which Derby Council. In addition he also holds non-executive directorships at Pilkington and Gartmore plc. He can barely have time to fit in a game of his beloved tennis now. (He played tennis as a junior for Derbyshire.) He laughs. He is lucky, he says, in that Williams is safe in the hands of a chief executive, Roger Carr, who has been in the company for 10 years. Carr used to head the famed hit squad that was sent in to sort out new acquisitions (legend has it they just used to watch for the first three months without saying anything).
'Roger and I are more of a partnership. A new chief executive would probably find it quite difficult coming in and unravelling what I put together. But actually I don't have these shibboleths that a lot of people have. I am constantly examining what we have done and questioning why we have done them. I think in a lot of companies that have founder chairmen, their chief executives come and go because the chairmen don't want people to change what was done 20 years ago.' That, he promises, is not the case at Williams. Carr himself agrees: 'The strength of Williams is that the chemistry here is very strong.' Not so strong, of course, that it prevented Williams's co-founder, Brian McGowan, from resigning two years ago. Rudd, I would guess, is perhaps still a little uneasy on the topic. He and McGowan went back a long way. They had met when both were accountants working for the conglomerate London and Northern in the '70s. When Rudd left at the age of 34 with £600,000 in his pocket after a lucky land-deal, he persuaded McGowan to buy into Williams with him (Rudd put in £300,000, McGowan put in £100,000). McGowan's involvement was crucial, as he had the City experience that Rudd lacked at that stage. His decision to walk out 12 years later has been a subject of continual speculation ever since.
'Brian was always going to retire at 50, and he genuinely meant to go fishing,' says Rudd with exasperation. 'It just so happens that Warburgs attacked him to join House of Fraser two weeks later. But the situation here was that there were too many of us at the top. There was Brian and me, and Roger who ran the business. There was a role for a chairman, and a role for a chief executive, and the chief executive job was being done by Roger. So he knew he had to go. The question was whether the City was going to tell us before we did it. Therefore we decided to do what was right before we were told to.' So it was short-straw time for McGowan? 'No, it wasn't "one of us had to go". It was Brian's choice that he was going to retire at 50, and it is well known in a company that if someone is going to retire in 18 months, then the waters just sort of close over your head, don't they?' McGowan declined to return my calls on the subject, but Rudd insists there was no rift, no row, whatever others may think. They are still friends. The week before we talked, Rudd had made a speech at McGowan's 50th birthday bash. And McGowan remains a major shareholder in the company. 'No,' says Carr laughing, when I ask him, 'that doesn't mean he asks awkward questions at the shareholders' meetings, but I wouldn't preclude it.' What drives Rudd on? Friends and colleagues talk about ambition, focus (inevitably) and an ability to motivate. Rudd himself says it is about making the most of what you have got. His strengths, he reckons, are actually very few. Apart from being extremely numerate and a good reader of accounts - after the amount of companies he has bought, you would expect him to be - he says he is also a good judge of character, something he is inclined to do instinctively and instantly. 'If I meet someone - and my wife always hates this about me - I make an instant decision. People often try and persuade me otherwise but I bet if I went to the trouble to make a note of all my first impressions, then looked at them three years later, I would seldom be wrong.' He also likes to confront things head on, he says, and not fudge them.
Yet he was never - and colleagues confirm this - the ruthless automaton, grinding out profits, that many conglomerate bosses are portrayed as. For one thing, he has always kept a sense of humour. 'The great thing about Nigel,' says Norman Askew, chief executive at East Midlands Electricity Board, 'is that there is absolutely no side to him.' There is, though, an obsessive finickyness about timekeeping (Rudd often arrives up to an hour early for appointments if he is worried about traffic, and then sits in his car and waits) and the hint of a temper. The last to feel the rough edge of his tongue was an analyst who Rudd thought was attempting a bear raid on Williams's shares some years ago. 'He issued an analysis where he hadn't consulted us, where the facts were wrong, and I got very angry because I thought he was trying to manipulate our share price,' says Rudd now.
He ascribes his drive to the ambition instilled in him by his mother, whose family had lost all their money in a bank crash in Dublin in the 1920s. She was determined that her boys - Rudd has an elder brother who went on to run Thomas Robinson plc (taken over by BM in 1992) - would be financially independent. 'My father had a good job with the local authority but she always thought of herself as being above this in a very middle-class sort of way, not a nasty way, just "my children will be better than this".' The route to that goal was through work, not education.
Consequently, Rudd junior was hauled out of Derby's Bemrose Grammar and articled to an accountant's firm even before his 16th birthday. He had expected to go to university but his mother decided otherwise. 'She had worked in an accountant's office once and I remember her saying, "I've never met a poor accountant".' It is funny, he muses, how the scars of one generation affect the next. His parents, who were already middle-aged when he was born, expected him to grow up quickly. He did. He was articled at 15, married at 22. Now his younger son (he has three children) is at Oxford, the first in the family to go to university. And does he instil the same driving ambition into his children? He shrugs, smiling. 'Of course, you don't, do you? I am the opposite. I am terribly laid back about what my children do.' He certainly has no desire for his children to join Williams. If they are any good at business, they will prove it elsewhere, he says, and anyway, he thinks it is unethical for public companies to become family fiefdoms.
Of course, 'laid back' is the last thing anyone would normally accuse Rudd of being. Aside from running his business, he is also a keen political animal - Williams has given £25,000 a year to the Conservative party for the past three years - but he says as yet he has no desire to inflict his opinions on others. 'I have an opinion but it's only an opinion. No more than anyone else's.' He did make a famous response to a radio reporter after Black Wednesday, pointing out that Britain's rude exit from the Exchange Rate Mechanism was great for manufacturing. It got a lot of publicity, not least because Norman Lamont (then Chancellor of the Exchequer) clung to it like a lifeboat at the following Conservative party conference, but Rudd has been proved right. He also remains convinced that a Conservative government is in his company's best interests. 'I think in a democracy it is very healthy to have a change of government, but my reaction is always, well, let's make it the government after next.' Labour's much-mooted redistribution of wealth by taxation could, he predicts, be hugely damaging to the City.
It will also, of course, be rather damaging to Rudd's own bank balance. With high earners constantly in the spotlight now, does he see himself as one of the 'undeserving rich' cited by Labour? He smiles. 'I don't know what they mean by "undeserving rich". People who make money by speculation, I suppose. I have created a business that employs huge numbers of people and created wealth for this country.' The problem, he says, is that if high tax rates are brought back, a lot of managers will just get paid abroad or ask for transfers. 'However jealous and envious Labour are I just hope they don't go over 50%. I don't think that is a bad thing but once it is over half it is confiscation. That said, I wouldn't leave the country even if it was 80%.' What nettles him, he continues, rising to the theme, is that the Labour Party seems to think people like him pay no tax. 'I actually paid about £600,000 in tax last year. I am not whingeing. I am just saying that is what I paid. What I find offensive is people who make a lot of money and move to Jersey, and because there is no record of them coming in and out again, they pay no tax. I hate it. They should be locked up. Because they are just as big a bunch of crooks as someone robbing a bank. I feel very strongly about that. And I find it offensive that merchant banks and suchlike pay people in gold bars. I earn my money and I pay my tax.' So at the risk of labouring the point, how does he justify a salary of £690,000 a year? Rudd winces but throws himself in. 'It is obviously impossible to justify a salary vis-a-vis that of a surgeon or a nurse or a teacher. What I would say is this. The remuneration committee take into account the fact that, if I so wish not to work for Williams, I could earn far more than that elsewhere. And I have no doubt in my own ability to do so.' So is there a secret to his success? He laughs. 'No,' he says, 'it's all a load of rubbish. Like everything else it's a mixture of fortune, timing and talent. But the mistake people make is thinking you do it on your own. You can't. My real talent has been getting people round me who can work together.' Then a secretary comes in with a message, he looks at his watch, and squawks. He is late - something which he never is. He is out the door faster than you can say goodbye.
BIOGRAPHICAL NOTES
1946 Born Derby
1958-1963 Educated Bemrose Grammar School
1963-1968 Articled to accountancy firm R J Weston
1968-1978 Ran subsidiary of London & Northern Securities
1978 Bought building/ contracting company C Price & Son
1982-Chairman of Williams Holdings (after C Price bought W Williams & Sons and the company was renamed)
1989-Chairman of Pendragon plc (formerly a division within the Williams Holding Group but floated as an independent company)
1992-Chairman of Derby Pride
1994-Non-executive chairman of East Midlands Electricity
- and also
Non-executive director of Gartmore plc and Pilkington plc; member of the Advisory Council for the Foundation of Manufacturing and Industry, and the CBI Economic Affairs Committee; Freeman of the City of London.
WHAT PEOPLE SAY
'Nigel has genuine entrepreneurial ability, very good vision, he spots opportunities and has the courage to follow it all through' Friend
'People think his success is about being hard-nosed, but it's about finding good businesses, investing in them and making them better' Norman Askew, chief executive, East Midlands Electricity Board
'The important difference between Williams and some other conglomerates is that Williams has always wanted to manage the businesses it has acquired, and turn them into quality manufacturing and marketing operations' Analyst and long-time Williams follower
'Nigel is refreshingly unpompous, but like many there is a line in the sand as to how far you can go' Colleague
'I have a nice house in Portugal and Derbyshire, my wife has a lot of nice furniture, but I'm not flash' Nigel Rudd on himself and his salary, 1991.
