SELL-O-TAPE
On the morning of Friday, 31 January, I sat down to read the papers over a coffee when a news story that had more than special interest for me caught my eye. ‘End of an era for the school name tag’ ran the headline, with the story reporting that Cash’s of Coventry — my old family business — ‘which for 140 years has been making the custom woven name tapes diligently sewn by parents into each piece of school uniform’ had just gone into administration.
Moreover Cash’s, Coventry’s oldest and most famous weaving and jacquard loom manufacturing business, dating back to 1846, was ‘desperately seeking a buyer’ after its name tapes went out of fashion with a new generation of parents who preferred permanent marker pens to label their children’s school uniforms and PE kits.
My father’s side of the family (which also founded the Abbey National Building Society and the 19th-century London accounting firm, Cash and Stone, which became Deloitte) had sold our remaining stake in Cash’s in the 1970s, so I knew little about the current state of the business other than that there definitely were no Cash family members involved in any way.
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Although I had grown up with a supply of Cash’s name tapes as a boy at school, and I knew my father used to visit the Cash’s factory from time to time when his cousin Anne Sargent had been managing director in the early 1970s, I hadn’t heard him mention anything about the business for years.
‘Desperately seeking a buyer’, eh? The opportunity had to be worth investigating. What had happened to Cash’s since its post-war glory days? What was the real reason for the decline and fall of what had once been one of Britain’s most successful manufacturing businesses, with a Royal warrant and factories all around the world? More to the point, was it worth making a bid for the Cash’s trademark and its assets?
And if I didn’t — as a direct descendant of John Cash of Coventry (1742-1811) — what would end up being the fate of a once great Quaker family company? With a silk and textile weaving tradition that began with John Cash in the town of Pownall Fee in Cheshire in 1640, Cash’s was — over 300 years later — to become one of the very first post-war ‘global’ British family businesses, with huge factories in America, Australia and Hong Kong.
Shortly after reading the Mail article, I rang a friend who used to work for KPMG and asked them to introduce me to the administration team who had been appointed by Cash’s in December 2013. I soon got a phone call from Craig Walker, one of the co-administrators at KPMG.
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He outlined the company’s position: ‘Basically, the business is profitable, and it is still making 9,000 name tapes a week,’ he said. ‘The problem is a large pension deficit of over £7 million that cannot be serviced. Cash’s have had to lay off nearly 50 people at the factory — now they are down to just a handful of employees.’
I then emailed KPMG: ‘The Cash family would very much like to be informed of developments and may be personally interested in being involved in the management buyout — certainly having a member of the original family involved in the new structure might be useful in enabling the business to describe itself again as a “family company”.’
I asked to see all the company accounts, the KPMG administration pack and report, and have access to the ‘data room’. I could travel to Coventry to meet with the management team — or whoever was still left — at the earliest opportunity.
IN THE FAMILY WAY
In his recent Radio 4 programme, Robert Peston spoke to dozens of family business owners across the country in an attempt to work out what was the secret of the family businesses that managed to survive for more than the archetypal cycle of ‘shirtsleeves to shirtsleeves’ in three generations.
One lesson that emerged from Peston’s odyssey around the country — from East End funeral parlours to a sprawling hardware empire where the owning family were at war with each other — is that once a family business is more than three generations old it has a much better chance of survival, so long as the business embraces change and adapts through new technology and commercial evolution.
Family businesses are one of the key drivers of the UK’s economic recovery. Research by Credit Suisse found that in 2011-12 60 per cent of family businesses across Europe showed growth of 5 per cent or more, while listed European companies reported revenues falling by 1 per cent or worse. According to the Institute for Family Business, chaired by Ross Warburton, family firms account for two-thirds of private sector enterprise in the UK, employing 40 per cent of the work force and sending £81.7 billion a year to the Treasury.
Well-managed family businesses are also critical to the global wealth management industry. The reason that JP Morgan host their annual black-tie family business awards is that these firms have long been the backbone of private banking. According to Fortune, around 35 per cent of Fortune 500 companies are family-controlled. Family businesses contribute around 50 per cent of US GDP and they employ 60 per cent of the American workforce.
Such figures make for somewhat painful reading. Instead of handing out family business awards at the Spear’s Wealth Management Awards, I could have been in the running for one. Looking back over the last twenty years, the fate of Cash’s seems to be a textbook case of everything that a family shouldn’t do to ensure survival.
If family businesses don’t have any family members owning and running the business, they soon implode and die. The Guardian, of all papers, in an unlikely-sounding leader entitled ‘In praise of Cash’s name tapes’ certainly seemed to think this was a factor in the slow death of the company. ‘There’s a fear that Cash’s is about to join such names as Woolworth’s and Blockbuster on the great commercial scrapheap of the recession years.
Cash and nametapes go together like Robinson and barley water. But the triumph of the marker pen has made nametapes look like 19th-century technology. The administrators must hope to find a buyer who will keep the Coventry-based firm’s name alive. Sadly, the days when the people running Cash’s had the surname Cash sewn into their own clothes are long gone.’ Could the founding family be that buyer?
BEHIND THE LABEL
Before I visited the Cash’s factory in Coventry to meet with the management, I had a word with my father, who produced a very fine Cash’s brochure from the early 1970s — entitled ‘The Inside Story of Cash’s’ — that he had been given on a visit. The cover was printed in smart gold leaf and the Royal warrant was prominently displayed under a headline that read ‘Coventry is the starting point’.
As I flicked through the brochure and read on, what was immediately clear was that the name tapes side of Cash’s was only a small part of the business, which was described as a ‘family business world-wide in scope’. ‘Labels unlimited, countless miles of ribbons — these are sent from the looms of J & J Cash to every quarter of the globe. The labels carry many of the world’s greatest names in manufacturing.’
Indeed, what I had not realised — and what the media certainly hadn’t reported on — was that the bulk of the old Cash’s business came not from making woven labels for school uniforms (which amounted to around 20 per cent of the business) but rather woven labels for Jermyn Street shirt-makers like Hilditch & Key or Harris Tweed, as well as many well-known sportswear brands. Hence, the company slogan of ‘The Name Behind the Name’.
The old Cash’s brochure had photographs of the huge Cash’s factory at Kingfield, Coventry, where the street is called Cash Lane and the local school is named after Joseph Cash, one of my ancestors. When I arrived by taxi from Coventry station, I found that Cash’s was now operating from an industrial estate on the outskirts of Coventry, with a large ‘To Let’ sign erected in an empty, overgrown industrial site next door.
The car park was nearly empty. The security cabin was locked and empty. A lone and weather-worn sign above the door displayed the Cash’s logo across an image of the world.
I was met by Gary, the acting managing director, who was leading the management buyout. As I toured the building, emptied of all employees, it looked as if the entire workforce had just been told to pack up and leave without having time to finish their sandwiches.
Half-eaten burgers and coffee cups sat beside the expensive French-made Staubli-Verdol jacquard looming machines. There were several dozen such looms, each costing around £200,000. The name-tape looms had been stopped mid-production.
Overall, the factory didn’t look like it had had any investment or a makeover for twenty years. It was stuck in the 1980s. Although there were exhibitions of Cash family memorabilia around the corridors, along with 1930s and 1950s advertising products and tokens from famous brands that Cash’s had once manufactured labels for — including Levi’s — it was interesting to observe that the Cash family connection abruptly stopped once you got inside the panelled boardroom.
The boardroom — which had been taken over by KPMG — had portraits not of Cash family members but rather of the family that had bought out the Cashes in the 1970s after the last Cash worked there.
CASH DEFICIT
As Gary explained, after the Cashes sold out, very little investment followed. The factory building which stood on several acres of prime land was sold off to a local property developer, who was now charging Cash’s around £150,000 a year rent — with no break clause. Not a good deal. What was clear is that the new owners of Cash’s had failed to apply the single most important lesson of taking over a family business (or any business, for that matter). That is: ‘Hire the best people to run it.’
While the name tapes side of the business made a small profit, the real problem, I learnt, had been the £7 million pension deficit. Now any new buyer was going to be buying only the assets of Cash’s and not its pension liability — which was going to be written off, along with the pensions of many former workers who were relying on Cash’s for their retirement. Ironically, it was because Cash’s were such benevolent employers — being originally Quakers who had believed in the co-operative model — that they ended up in the mess that I was looking at.
As my father’s brochure from the 1970s put it: ‘Cash’s today is a unique, entirely British-controlled organisation and the largest of its kind in the world. Not only are descendants of the family still in active management at Cash’s — but family connections among skilled workers go back for three or four generations.’ For the old Cash’s business, employees were family as well and were treated as such.
‘Employees take special pride in their craft at Cash’s… They have a sense of belonging that is the direct result of the firm’s enlightened outlook. They know they can rely on the company’s interest and concern for them as individuals at all times.’
Alas, no longer.
What quickly emerged — helped by a story leaked to the Sunday Times business pages the day after I visited the factory — was that the Chinese business Jointak Labels wished to take control, using the existing management team (led by Gary) without taking on any of the responsibility for the pension or even keeping Cash’s at the factory.
After looking at the books with a private equity team from Platenum, led by Zoe Appleyard, we made an offer of £250,000. We soon learnt from KPMG that it was the winning bid — or at least seemed to be, subject to more due diligence. The offer was made on the basis that an important growth area of the business was anti-counterfeit labelling, with Cash’s having developed and patented a new’Unique Identification’ technology, a woven hologram labelling system that allows luxury brands to track every item of clothing with a unique label number to authenticate all products around the world.
In addition to this technology — something that Cash’s had invested in quite heavily over the last two decades — the company was also (as I later discovered) co-developing an even more sophisticated printed, not woven, anti-counterfeiting technology called Certi-Eye with Jointak Labels.
CHINESE TAKEAWAY
We were given just two days to make a final offer by KPMG, which we thought was not best practice and which suggested that a deal had already been ‘sewn up’ by KPMG and the management team, who had been in advanced talks before our offer came along. It wasn’t to be. Doing business with a Chinese textile family was not straightforward at all. After we examined the paperwork relating to intellectual copyright and trademark use, it transpired that there were major issues with what Cash’s actually owned.
As my lawyer, David Archer of Pitmans, wrote to KPMG: ‘After making his original offer to buy back the remaining assets of his family’s historic business, our client has tried hard to reach agreement with Jointak and the existing management team to find a way to work together as our client felt that restoring some of the Cash DNA to the rebranded Cash’s would be an ideal way to relaunch the company and continue its 150-year-plus commercial history.
‘Despite reaching what we thought were agreed Heads of Terms negotiations on Sunday, a fair and reasonable working agreement has proved impossible to conclude. Hence, as advised last night, our client and his family wish to continue making their own offer. Whatever the outcome, our client is also open to talking further about continuing the Cashes’ association with the family firm they founded over 150 years ago.’
When my lawyer later insisted that we would only go ahead once KPMG had issued guarantees that the copyright and trademarks for the UK were still legally owned by Cash’s, and KPMG refused, we walked away. So when you buy your name tapes at John Lewis for your son to have sewn into his prep school pyjamas, know that it is Cash’s of China — not Coventry.
