In mid-2007 I decided to go to the headhunters with an updated CV, looking for non-executive director (NED) positions (to see my qualifications, read below).
All were keen to use me as a potential NED except Lynn Anderson, who was managing partner of Russell Reynolds and who I knew socially in Mosman. After giving him my pitch he looked at me and said: “Are you stark-raving mad?”
He asked me how much I was worth and I demurred, so he asked me if I owned my house. I replied in the affirmative and he then said that he estimated my worth to be about $10 million, which was pretty close.
He then said: “Chris you should look at the mirror every day and say to yourself ‘I am eminently sueable’. They will want to put you on high-tech companies which are far too risky. Forget being an NED.”
These comments took me by surprise because it is rare that someone does not act in his own self-interest and for a headhunter to turn down the opportunity to earn commission from good stock is rare indeed.
Several weeks after that event I was on the golf course relating the story and a fellow player said I had just received the best advice I could get, and lamented about how he wished someone had said that to him five years ago.
His story was that he had joined the smallest division of a family company, where total revenues were about $50m.
After three years he had had tripled the turnover of his division and he was asked to join the board, which he accepted with alacrity.
Several years later the largest division got into cash flow difficulties, the lawyers got into the ears of the family shareholder/directors and they put the company into administration.
The administrator ripped out $1.5 million in fees, the bank was paid back $6 million and the administrator then appointed his mate the liquidator, who promptly sued the directors for trading while insolvent.
The liquidator, sitting on a cash pile of $2 million, commissioned a $100,000 report showing that the company may have been insolvent within 12 months of going into administration. In the end my now embittered and significantly poorer golf colleague gave up and settled for a total bill of $250,000 including costs.
The third and final nail in the coffin of my NED hopes was ([CIBC Merchant Banking managing director] Malcolm Irving saying that the secret to being a NED was that if there was the hint of any difficulty with company, the NED should resign.
Undoubtedly Malcolm’s views are tainted by his experiences at Reynolds Wines but the reality is with small companies, every month brings new challenges. If you adopted Malcolm’s advice you would not last more than six months as a director.
I then reflected that the one administrator I know has a house in Mosman, a house at Palm Beach and he buys his wife a new Mercedes 500Sl every year. I have told this story to a number of individuals who would make excellent NEDs for small and medium companies but because of the current legal environment (which is getting worse every year) refuse to do so.
About me
I was born at Bath in England in November 1944 of an American father and British mother. We spent the next 13 years on American Air Force bases before returning to Bath, where I finished school and then went to Cambridge and the London Business School.
I came to Australia in 1973, married Vivienne, who is Welsh. We have two beautiful daughters.
I worked in the IT industry, starting with IBM in 1967 as a programmer and progressing from salesperson to divisional general manager with ICL, GEC and TNT. The largest profit centre I managed employed more than 300 people and had sales of more than $30 million.
From 1981 until mid-2007 I worked in the Australian financial services industry, starting at Bankers Trust, where I launched the BT Hi-Yield CMT, the BT Split Trust and BT Innovation Limited.
I then founded Nanyang Ventures (1995-2007), which raised more than $140 million of institutional private equity funds. I was the director of some 30 public and VC-backed private companies including the chairman of Scitec, Neverfail SpringWater, VeCommerce and Mooter Media.
I am a Fellow of the Australian Institute of Company Directors, the Australian Institute of Management and I was a Senior Fellow of Finsia. I am president of the Cambridge Society of NSW.
