Jim Clifford OBE Stories, like pictures, convey so much in a short space. They make it easy for us to “get it”, and to remember key thoughts so we can dwell on and develop them later. From modern novels through myriad folk tales to ancient writings there is so much to stimulate our ideas today.

I’m hearing a lot of discussion at the moment from private companies both enthusiastic and some too nervous to invest. In the third sector there seems to be emerging discussions about how trustees can embrace, or vehemently resist, growth by acquisition. Governance and growth seems to be an emerging focus point for some. Maybe the sectors are not so dissimilar ? Each can look to acquisitions as a means for growth, and disposals as a means for managing value and re-focusing. Some tackle it head-on, understand and embrace the risks, decide what to do, and do it, often with considerable success. They grow, they develop, they achieve more. Others, through fear of losing capital, through a deep-seated belief that the world will forever remain unchanged, or indeed through sheer laziness for a few, refuse to consider the opportunities, and too often get into a loop of examining and re-examining the options and the risks until they run out of time or energy.

Don’t “get me wrong”: I’m not saying that everyone should get into acquisition or disposal. It won’t always add value, and it may cause knock-on difficulties. What I am saying is organisations shouldn’t shy away from it. Whether doing a duty as directors to our shareholders, or as a trustee to our beneficiaries we owe a duty to think positively about whether there could be value in it.

In the Christian Bible there is a story known as the “Parable of the Talents.” A wealthy man gives three of his servants some money to manage for him whilst he’s away. The first takes his ten units, invests well, and makes a good return for his master. The second, given a bit less, nevertheless does well. The third, scared of criticism, and mis-construing his duty as being to take care of and return the money safe, hides it and returns it later. His master is cross: “I told you to use it, not to hide it. If I hadn’t intended you to make it work I’d have put it in the bank and at least earned a little on it.”

This makes so much sense: a reasonable degree of speculation – risk-taking even – in line with stakeholders’ or shareholders’ needs and desires is required. Reacting to that we have a number of options. We can dispose of assets that are no longer working for us as well as they could work for someone else, and reinvest in or focus on something more useful and relevant. We can acquire – and both private sector and third sector organisations are now doing this in similar ways – to deliver growth and value more quickly and more extensively. The challenge, then, is to look objectively at this and not dismiss the idea just because it’s new. As a private sector director, when is the last time you revisited your plans with the serious question: what can we buy that would make us stronger and better ? As the third sector executive, or trustee, could you deliver more value to beneficiaries, or de-risk your operations by acquiring ?

Jim Clifford OBE

 

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