The Money Makers. Harry Bingham
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George wouldn’t even be able to afford a mug of tea like this one. And as for mingling with the likes of Kiki, the thought was absurd. The only way she knew how to have a cheap day out was to forget her purse, and that only meant somebody else picked up the bills. George shoved his mug away.
‘Let’s take a look around,’ he said.
The old man led him around the factory. A sawmill operated at one end of the complex. Logs came in, were sawn and treated, and lay stacked in neat rows. Right now it was clear that the sawmill was not exactly busy. The few men who were there made no pretence of working when they saw their boss. Instead they stared bluntly at George and George was not left in much doubt whether they approved of what they saw. The day was dull with rain on the moors, but George tucked his sunglasses more firmly on to his nose.
The factory floor was busier. Around half the men glanced up and continued to work, the rest gave George the same candid appraisal he had received in the sawmill. The verdict, he guessed rightly, was the same.
The old man hadn’t lied when he spoke of craft methods. The factory used machine tools, of course, but each piece of furniture was sawn and assembled by hand. Gissing showed George how they had been forced to compromise standards by the imperative of cutting costs. Dovetailed joints had given way to tongue-and-groove, tongue-and-groove to nails and glue. Old man Gissing seemed to want to lament each nail until George dragged him off. The tour finished with the paint shop, the warehouse, and a totally absurd factory shop, whose last customer had died in the shock of the Profumo scandal.
Back in the executive office, the old man pulled out the company’s accounts. It was a relief to see they had been run off using a computer, not a quill pen. George pored over the papers. Until a little over two months ago, he’d never looked at a balance sheet in his life and vaguely thought that double-entry book-keeping was something practised by the shadier sort of bookmaker. He’d had plenty to learn.
He looked at the annual accounts for every year since 1980. He looked at the monthly reports for each of the last thirty-six months. He had Tom Gissing explain to him in laborious detail the intricacies of the ‘LIFO’ inventory reporting system, the reducing balance method of depreciation, the acronyms used to identify the machine tools logged on the register of assets. He even drank two mugs of peaty tea.
After eight solid hours he understood the story. Back in the early eighties, recession had actually been kind to Gissings. Larger competitors had seen their export markets wither and hadn’t chopped their costs quickly enough. Gissings, without an export market to lose, had trimmed costs, redesigned its products, and made money. It had earned revenues of £1.9 million on costs of £1.7 million. Mr Gissing, as managing director, had elected to pay the shareholder, Mr Gissing, a handsome dividend of £50,000. But that was a long time ago.
The profit spurt of the early eighties dwindled away as other companies found their feet. For the last part of the decade, the company had bumped along at break-even, squeezing capital expenditure here, trimming marketing budgets there, forsaking product development in favour of cosmetic changes which came too little, too late.
The recession of the nineties had been cruel. In the last year before the economy tanked, old Tom Gissing had somehow persuaded his bank to approve a loan of £400,000. The idea was to provide the impetus for a major renewal. The production area was to be expanded and modernised, and new computer design systems would be introduced. Perhaps – just perhaps – if all had gone according to plan, The Gissings Modern Furniture Company would have found a new lease of life.
But recession came. Gissings’ markets trembled and collapsed. The money from the loan went to meet the company’s losses. Worse still, the prime contractor on the construction work went bust with the job half done and Gissings’ advance payments in his pocket. Redesign of the product range was halted. Costs were trimmed when they should have been slashed. The £400,000 loan ballooned into £550,000, with arrears of interest. Penalty interest was now being charged and the dangerous snowball gathered momentum at a compound rate.
Meanwhile, old man Gissing had lost his will to fight. He spent his time sorting through the company archives and threw his remaining energies into setting up a ‘museum’ to lure visitors to the factory shop.
The bank had been tolerant, but its patience was at an end. Three weeks ago the bank had called in its loan. Gissings had thirty days to find the cash. If it failed, the official receiver – a cross between a bailiff and an undertaker – would step in. He would auction the company for whatever he could get, and if he thought the company would fetch nothing, he’d close it down and sell the assets piece by piece. Either way, Tom Gissing wouldn’t end up with a brass farthing.
The thought terrified the old man. Losing the company to someone else would be hard, but watching the firm die would probably kill him. That was why he had called in the accountants. The accountants had come in, drawn up a report, and stuck an ad in the ‘Businesses for Sale’ page of the Financial Times. That was where George had found the name, and where he’d obtained the report which had encouraged him to make the visit. But whatever rosy words the accountants used, the company was in a desperate plight.
It was now eight days before the deadline and the evening was drawing on. George had read everything, examined everything. He had seen all he wanted and still had no idea whether this walking dead company could ever live again. On the other hand, there were some simple facts he hadn’t lost sight of. He had no money, so buying anything at all would be a triumph of sorts. Also, he had traipsed across Britain for two months in search of a company he could buy for next to nothing. So far he’d found nothing at all. The good companies were totally unaffordable. The bad ones much worse than hopeless. And Gissings, for all its faults, had one major advantage: it still sold one and a half million quids’ worth of furniture each year. That meant there was something to work with.
The old man came back into the room. In the deserted factory buildings only George, the old man and his secretary were left. In the course of the day Tom Gissing had floated away from reality altogether. At times he seemed to think he was selling his company for a small fortune. At other times he treated George like a business partner and spoke of how they would develop the business together. Sometimes it was as though George were a historian, there to record the proudest moments of the company’s glorious past. It was pathetic. George wanted out.
Gissing dumped another load of papers on to the table.
‘I expect you’ll be wanting to see these next. Some of our very earliest brochures. See this? The Thunderer! What a name for a desk, eh? Very daring at the time, I can tell you.’
George interrupted rudely.
‘I’ve come to buy your company.’
The old man sank into a chair.
‘Yes. Yes, of course. Quite right.’
‘Have you had any other offers?’
The old man shook his head. ‘No.’
‘It’s not worth much right now, is it? Not with half a million quid of debt. Not when you haven’t made a profit for six years.’
‘No, well, I suppose you’re right. Still you never know. Things look a bit rough, but we’ve never lost hope.’
‘Yeah, well, whatever,’ said George. ‘I want to make an offer for the lot. Factory, designs, inventory. The lot.’
The old man licked his lips, which had gone suddenly dry. ‘How much?’ he croaked, his voice barely audible.
The question threw George. He’d only just made up his mind to make an offer, and it hadn’t occurred to him to think of a price. He shoved his hands into his pockets for inspiration.
‘I’ll give you a pound,’ he said, tossing a coin on to the table. It spun for a moment then fell over. ‘If you give me the company, I can recapitalise it and make it live. If you don’t, the company and all your hard work will die. The bank will kill it. You know it will.’
George hadn’t intended to be cruel, but he was