Review of the year 2020

“May you live in interesting times”

May you live in interesting times is thought to be an English translation of an ancient Chinese curse. Having lived through 2020, I can now understand why it is a curse rather than a blessing! While last year I wrote that it was difficult to write an interesting annual review in a year when nothing big happened, unfortunately I have no such excuse this time round.

When the Coronavirus hit the UK and the first lockdown was announced on the 23rd of March an incredibly difficult period began for all of our businesses. I think we will all remember the night when Boris and Nicola told us that we must “stay at home” and only leave the house for essential purposes. We all knew it was coming, but it was still a shock…. after all, you can’t maintain a hospital’s critical power services, repair steam process pipework, decommission industrial tanks or manufacture aircraft components from your living room. The months that followed were some of the most challenging we’ve faced in business but each team rolled their sleeves up and met the challenge head on.

We see ourselves as an extension of our management teams – there when we are needed and letting management get on with it when we are not. While I’m sure no-one will miss the back-to-back Zoom and Teams calls from 8am to 8pm, it was rewarding for us to be able to provide support at such a difficult time. While most of our time is spent supporting strategic growth and acting as a sounding board – sharing problems, ideas and opinions – this year we also found ourselves as that “extra pair of hands”. Management were able to focus on the extreme day to day demands that were being thrown at them and we were able to support across the business from health & safety to business planning, from furlough implementation to customer and employee communications. The job seemed to change from day to day with lots of new issues but it was always urgent and always important to get it right.

I’m proud of the effort, commitment and camaraderie the leaders and teams in all of our businesses showed – putting the health and safety of our employees first but continuing to provide the essential services that our customers needed. A big thank you to all of them from all of us at Nevis.


Do the Right Thing and Success Will Follow

As we navigated our way through what seemed like daily changes in guidance and rules, we instinctively and, in some cases unconsciously, reverted to our principles. Each one has served us well in 2020 but I’d like to spend a little time talking about the first:

“We will do the “right thing” – making the choices we believe to be in the long-term interests of the businesses we own a share in, even if this results in lower profits in the short term.”

So what does that focus on long-term ownership look like in practice under the microscope of a pandemic? Two of our businesses more severely impacted by the virus were Merkland Tank and Astec Precision. Customer demand dropped significantly for both, either as a direct result of the lockdown restrictions or the impact upon end markets such as aerospace and oil & gas.

I think in many PLC or private equity environments, the reaction to such a drop in demand could have been to drastically cut costs and to postpone or cancel investments. For us, the virus has not changed our view that both businesses have bright futures and so, despite an adverse impact on current year profits, we continued to focus on building each business for the long term.

At Merkland, we are looking to broaden our service offering and geographic coverage with the goal of creating a quality national business. To this end, we invested to significantly increase our tanker capacity and recruited new skills and experience to lay the foundations for future development. We believe that investing in people and assets before you “need” them is a prerequisite for sustainable growth.

At Astec, we identified manufacturing capacity as the major constraint on achieving our potential. In 2020, we addressed this with a move to new world class facilities, identifying and securing a nearby site that trebled our footprint and ensured we could retain our skilled and experienced workforce. Further building blocks were put in place by strengthening our team with new Operations and Finance Director roles; acquiring market leading automated production machinery; and investing significant time and effort in securing new mutually beneficial partnerships with key customers.

While the financial results won’t show it this year, we are confident that by “Doing the Right Things” in 2020, success will follow for both businesses in the years to come.


Everything changes but everything stays the same

As a long-term owner of businesses, one of our key challenges is the transition of leadership. Often the leaders in these businesses are also significant shareholders and many have founded their business or shaped them over extended periods of time.

Succession in these circumstances requires not just the usual leadership and commercial traits sought in a Managing Director but also a healthy dose of humility and respect for the company’s heritage. While a change like this offers opportunities, it also carries a big risk to the culture and make-up that has made the company successful to date. So, no pressure on Gary Shepherd and David Oates who became Managing Director at James Ramsay and DTGen respectively!

Fortunately, we have had the luxury of time to consider both appointments. At DTGen, we own the business with Paul Moore and he has done a great job to grow the business and to broaden our capability. A couple of years ago, Paul saw an opportunity to continue this development with the objective of becoming the UK’s leading generator company. To do that, we all agreed that Paul would need to augment the leadership team and Paul identified David as the ideal candidate for Managing Director. Having both worked in the generator industry for most of their careers, Paul and David knew each other well and Paul recognised that David’s experience in global power businesses would really help DTGen to scale. Having got to know him ourselves we’re confident that David’s personal skills are as good a fit as his sector ones. David’s appointment allows Paul to become Chairman and drive our strategy of expanding further in the English and gas generator markets. We believe strongly that it is teams rather than individuals who are successful and that the addition of David gives us a better chance of achieving this goal.

James Ramsay celebrated its 100th year in business in 2020 and Raymond Shepherd, who has led the business since we acquired a majority stake in 2012, has been a director and shareholder for more than thirty of those. During our ownership, we have worked with Raymond to develop the next tier of management and have been pleased to see his sons, Jamie and Gary, progress through the ranks from engineers to become directors and shareholders themselves. This year, with Raymond looking to plan for an eventual retirement, it felt natural that Gary replaced him in the MD role. Having done his apprenticeship with the business, Gary knows it inside out and has been a key contributor as the business has grown from 20 people to more than 60. With the support of Jamie and the team they have built, we are well placed to plan for further growth over the next 100 years!

For his part, Raymond’s focus will be on continuing the development of our teams in both sales and operations. He has always led from the front in ensuring we provide outstanding quality and customer service and we can think of no better way of safeguarding the future of the business than his instilling these standards in our next generation of leaders.

Both Paul and Raymond have crucial ongoing roles but both should feel a sense of pride at what has been achieved in their time as MD. The New Zealand All Blacks are widely regarded as the most successful sports team in history and in his book outlining the key principles behind their success, Jerry Kerr identifies an unrelenting mission that each All Black accepts: “to leave the jersey in a better place”. As they collect their new jerseys, Paul and Raymond know that they leave the MD jerseys in far better shape than they found them – both businesses have grown more than three-fold in their tenures – and I’m sure both David and Gary will be glad to have the support of their predecessor as they look to continue their good work.


It’s all about your people

Gary and Jamie’s progression at James Ramsay is indicative of the type of culture we are seeking to create in all of our companies. A culture where all employees are provided with the opportunity to develop themselves and to create rewarding career paths. We recently contributed to an article on what we think makes a good CEO and noted that in our experience the best leaders often have deep company experience. People who have worked their way up through the business have a good grasp of the technical aspects (often through an apprenticeship) and they understand and value technical expertise. This depth of knowledge not only helps the leader to relate to the experiences and challenges of employees at all levels, but it also gives an edge to assessing the commercial side of new opportunities. It is our hope that, over time, we can create cultures in which we have a “conveyor” of talent coming through each business ready to help continue their growth and development.



The uncertainty caused by COVID and Brexit made 2020 an especially difficult year in which to assess and complete new deals. That said, with the exception of Q2, we saw a good flow of opportunities with many people using our Nevis Explorers scheme to introduce us to businesses. That allowed us to develop a number of new relationships with business owners that we believe will transition into deals when they feel the time is right to take a step back and realise some or all of the value of their business.

For us, the year ended on a frustrating note as a deal we had been working on fell over at the last minute (well that’s 2020 for you!). We are long enough in the tooth to know that it is challenging to get deals done at the best of times, never mind in a global pandemic. We were attracted to the opportunity as the business had a great team, a strong niche and the potential to scale significantly in Europe and North America. We felt that Nevis was a good fit with the existing owners and they recognised that by partnering we could help and support them to build the team, systems and infrastructure required to scale sustainably.

Looking past the short-term problems of Brexit, Coronavirus and the economy, we saw a strong business with good long-term opportunities. However, these uncertainties were a challenge for all of the stakeholders in the business and in the end issues on banking and tax meant that we weren’t able to get the deal completed. That doesn’t mean the time we spent was wasted. The knowledge we gained in areas like Brexit planning were able to be shared with our existing portfolio and we are hopeful that the opportunity or one similar will arise again in the future.


Here’s to less interesting times…

At times, the trials and tribulations that began in 2020 seemed like they would never end but there is nothing surer than they will. We look forward to getting back to the simple pleasures of being able to meet up with many of you (hopefully over some food or a drink!) when they do.

As we reflect on the year, we are reminded that owning a private business is a great privilege, providing the opportunity to really make a difference, to choose with whom you work and to plot your own course. With this privilege comes responsibility and often difficult decisions. We’ve certainly felt the benefit of having a team of like-minded people around us and a set of firm principles to guide these decisions. If, as a business owner, you too have felt this over the course of 2020 or if you think that could be an asset to you and your business in the future then please get in touch. We’d love to hear from you.