This week’s UNDICTATED focuses on a very special man, the late Bill Lynch. A humble, undramatic, focused person, he was made in the mould of great business leaders immortalized in Jim Collins’ classic Good To Great. Lynch would make any list of SA’s top five entrepreneurs of the modern era. Indeed, he is the only one to have been honoured as the best in the world by EY’s international competition. My daughter Caitlin and I were with Bill on that memorable night in June 2006. That evening forms the cornerstone of this contribution. – AH
By Alec Hogg*
You can learn a lot looking inside a man cave. Those secret places where we hunters go for solace, to recover energy, lick wounds. And do our thinking.
A wall in my den is for memories. It’s dominated by a collage from an evening in Monaco with the late Bill Lynch, architect of the R50bn Top 40 company Imperial Holdings.
I knew Lynch for many years. Mostly on a superficial level. We saw each other bi-annually in the radio studio to discuss Imperial’s financial updates. Occasionally he’d pop in for a special focus on entrepreneurship or another topic close to his heart. We were associates. Friendly, not close.
Then seven years ago, that changed when fate threw us together for a spectacular few days.
Bill had won the South African leg of the World Entrepreneur of the Year competition. My company was the media partner. So we ended up in Monaco together for the grand finale of the event’s 20th renewal.
There were contenders from 32 countries that year. Among them a Taiwanese whose company built one of every three laptops worldwide. Another strong contender was the co-founder of then high-flying US giant The Home Depot.
As usually happens when South Africans travel, we were a tight unit, eight of us, including Bill’s wife Ann, supporting our Champion. A small group, easy to get lost in a crowd of 700. Especially as reality dawned that this was a competition won by business rock stars like Google’s founders Larry Page and Sergey Brin; Amazon’s Jeff Bezos and Starbucks founder Howard Schultz.
In spite of the odds, this was Bill Lynch’s night.
The only hint beforehand was when ARM’s Patrice Motsepe and wife Precious joined us at Table 31. Motsepe doesn’t just pitch. He’d won the SA leg in 2003, but didn’t cracked the big one. Neither did other local leg winners like Bidvest’s Brian Joffe, Naspers’ Koos Bekker or Aspen’s Stephen Saad.
The only South African to put his hands around the World Cup for Businessmen was the man I was sat with that night in June 2006.
After the glare of television cameras and crush of reporters had ended, we walked back together to our hotel. Bill with his Springbok Green bow tie that matched Ann’s dress. Talking calmly and quietly as always.
The way he handled it all, you’d think this humble 62 year old was born to it. He wasn’t. Lynch grew up dirt poor in rural Ireland. He arrived in Johannesburg in 1971 with a young wife, a farm school education and only enough in his pockets to buy food for a couple months.
Lynch knocked on many doors before the owner of a failing motor dealership, Percy Abelkop, took a chance on him.
I never did ask, but on the night he was crowned the world’s best entrepreneur it’s unlikely Bill and Ann were aware of the brain tumour that would kill him just 18 months later. Even if they had been, that night they would surely have believed anything possible.
Lynch regarded the award an honour for his adopted country. He wanted to use the recognition to inspire others. He was determined to pass along what he had learnt. And spoke passionately about a great future for his homeland.
Just a year after Monaco, in July 2007, Lynch’s health problems became very public when he stepped down from a business he’d grown from a market cap of R35m to over R35bn. He passed away six months later.
Lynch was succeeded by Hubert Brody, a largely anonymous former banker hidden inside Imperial for the previous eight years. At first blush, he typified those living in shadows of larger than life characters. Tall and slim, Brody is reserved, private. A polite family man and, to boot, a chartered accountant.
Investors rushed for the exit. Especially once this “bean counter” started talking about dismantling the house Bill built. Few listened when Brody tried to explain it wasn’t his brainwave, how the team had already decided during Lynch’s tenure to sell or unbundle its capital-heavy parts.
On Lynch’s big night in Monaco, the Imperial share price was R130. By the time his retirement was announced, it had risen to R160. Just one year into Brody’s stewardship, the stock traded under R45.
Mr Market, jittery after the financial crisis, had judged Imperial’s newcomer and found him wanting.
But as Benjamin Graham taught us eighty years ago in The Intelligent Investor, the share market is a voting machine. Price is what you pay. Value is what you get.
Those who backed Brody got their value in meaty chunks. Five years later the share price has quadrupled. More importantly, the surge to R220 comes off solid earnings growth as our table illustrates so clearly.
The outgoing Imperial CEO is only 49. He will leave next year after helping find a successor for the R50bn group. Headhunters will be licking their lips. They shouldn’t bother.
Imperial’s outgoing boss is not in the market for another corporate assignment. He will be devoting more time to his family. Also, like Brody, Imperial’s next CEO will almost certainly come from inside.
Brody says what makes the group work is the way it has retained much of the Bill Lynch DNA. Managers are encouraged to be entrepreneurial. Performance is measured on how they allocate resources. Power is decentralized.
All of which is difficult for most outsiders to absorb.
Perhaps Mr Market has learnt his lesson. Probably not. So if he slaps the share price around when another Imperial unknown is named CEO, take advantage. It could be telegraphing one of the clearest buy signals you’re likely to get.
Hubert Brody v Competitors: 2008 to 2013
| CEO | Company | Appointed | HEPS 2008 | Latest HEPS | Years | CAGR** |
|---|---|---|---|---|---|---|
| Clive Thompson | Barloworld | Dec-06 | 614 | 680 | 5 | 2.1% |
| Brian Joffe | Bidvest | Jan-88 | 1068 | 1561 | 6 | 6.5% |
| Hubert Brody | Imperial | Jun-07 | 718 | 1804 | 6 | 16.6% |
| Markus Jooste | Steinhoff | Jan-97 | 263 | 395 | 6 | 7.0% |
** Compound annual growth rate of Headline Earnings per share.
Data provided by Profile Data.
* Alec Hogg is a writer and broadcaster who founded Moneyweb. He now runs biznewz.com. This story was first published in Business Day newspaper.
