The golfer who came back for more
| Outgoing Bidvest CEO Brian Joffe has no regrets about dumping golf for a career in business
BRIAN Joffe has worked hard since his first retirement.
When the trained accountant, barely in his 30s, sold a pet food business for R1-million he retired to the US to play golf.
It was a bad decision, but a serendipitous return to South Africa in 1982 to watch a race in which a horse he owned was running launched a career of much more astute choices.
“The then-buyer of the OK Bazaars suggested I should get back into the pet food business,” said Joffe this week from Bidvest’s Sandton office.
He made a tilt at the Lopis brand but failed.
The 68-year-old version of Joffe branded the decision of his younger self to retire as “stupidity”.
“But in a way it was good for me because I had a break and could rejuvenate. It brought me back. I had two small children and golf was more important to me than anything else at the time, even though I wasn’t a particularly great golfer. Now, I don’t see myself doing nothing, that’s for sure.”
Joffe is stepping down as Bidvest group CEO after 28 years, but in effect he will simply loosen his control of the business in South Africa, as he gets involved with the international food service business.
After the failed Lopis bid, Joffe was offered a consulting contract with Standard Merchant Bank for a package that was “a lot for a few hours a week”.
Retired Standard Bank Group CEO Jacko Maree, then a young corporate financier, said Joffe may be small of stature but his shoes would be large to fill.
“Even then it was clear he was always an entrepreneur at heart and was intent on doing deals. Brian has one of the smartest business brains.
“His ability to immediately grasp numbers was mind-boggling. His future career in buying and selling companies came as no surprise. If you look around the world at conglomerates that straddle many industries there are very few that have been able to survive for a long time. It’s hard to keep diversified businesses together and extract synergies.”
Although Maree attributed this partly to Joffe’s acuity, he also said Joffe’s other prime ability lay in identifying entrepreneurial talent to run a decentralised Bidvest business model.
The consulting position led to him joining Manny Simchowitz at industrial group Weil & Ascheim as MD.
Joffe attributed everything he learnt about focusing on returns — and getting each employee to be cognisant of their collective contribution to cutting costs — to Simchowitz. “That is an astute man. A go-getter. Insightful man. I learnt a lot from him.”
After Simchowitz sold out of W&A Group to Jeff Liebesman, Joffe’s plans for the business clashed with those of the new partner and he went his own way, creating Bidco as a listed shell for his acquisitions.
Although he could not identify one transaction as having been his best, he did single out the decision to buy the Chipkins catering supplies business in 1988. That deal also illuminated the impossibility of repeating a career like his.
Although Standard Bank and Old Mutual provided valuable support through his career, it was Investec group CEO Stephen Koseff — who subsequently served on the Bidvest board for 25 years — who backed the Chipkins deal with R25-million, kickstarting the Bidvest group that is now worth R120-billion.
“He’s an example of a South African who’s managed to build a strong local business and expand internationally, creating a lot of jobs. We need a lot more Joffes,” said Koseff.
And although market turbulence and depressed asset prices in South Africa mirror the late-’80s business environment under sanctions, Joffe said entrepreneurs faced many more hurdles in piecing together a business like Bidvest.
“The rules of the game are much more difficult now. Governance rules in the public company arena and the time frame for consummating transactions is immeasurably different. Back then, there wasn’t really a com- petition authority, just some flimsy competition rules.
“You could sign a piece of paper, hand over the share certificate and consummate a transaction in four minutes.
“Now that can take four months. For somebody to consolidate a market, like we did in food and other areas, is almost impossible today.”
He said starting off with a piece that was too small would make getting to scale difficult. Owning too much to begin with would lead to governance issues before long.
“We used to do maybe 30 deals a year. Now three is a lot.”
The age of the entrepreneur was not
over, he said, but a developed world regulatory framework might hamper the development of South African entrepreneurs.
Joffe said he didn’t always have the money to complete transactions either, creating them first and sometimes finding funding later. He also admitted to sometimes missing out on deals through being “too miserly” or demanding, as well as overpaying for some underperforming businesses.
One of the few times Joffe drifted from his well-tested acquisition strategy was the Adcock acquisition in 2013.
Influenced by the heat and noise around the deal and without doing a sufficiently rigorous due diligence, he ended up overpaying for the business. And, unusually, its leadership — which had very publicly opposed Joffe’s bid — left shortly after it was evident he would prevail over the competing bid from Chilean-based CFR.
The episode still rankled, but Joffe insisted Adcock would prove to be a good investment — it would just take a little longer than usual.
Replacing him as a figurehead had been a complex issue, but the decentralised organisation of Bidvest meant there was no shortage of entrepreneurial leaders in the group.
“Historically what we did was use the engine of South Africa to buy food service businesses offshore. We concentrated on that because an opportunity arose in Australia in the days of exchange controls. There was no natural fit between the food business and the industrial business or between offshore and local.”
Management teams were nearly always kept intact.
“Where there were vendors, too, they tended to stay with the business and grow with us. We gave them the confidence, the capital, the know-how, some took shares — that’s how it got to be what Bidvest is today.”
Bidvest had always been opportunistic, said Joffe.
“In the late ’80s with sanctions covering South Africa, large corporates like South African Breweries owned Edgars, OK Bazaars, PG Glass. All these big guys like Old Mutual and Barlows gave no opportunity — they owned everything. Bidvest was built up from the crumbs these guys left on the table.”
Working sometimes 18 to 24 hours a day from the early years took its toll on family life, but “overall, the package, the ride has been good for me”.
“I could have made much more money in the process of what I did. I have enough to live on, but it was never the thinking about my own pocket. I neglected my personal stuff. All my arrangements are not perfectly in order. Maybe now I’ll have time to do that.
“I worked hard. I could have managed my time better but I was focused on making sure Bidvest was the beneficiary of whatever I did. I was told by many people what I was doing would never work. But I think it’s a model that works and more people are starting to copy the way Bidvest works. My own simple way.” — Additional reporting by Ann Crotty
To consolidate a market like we did is almost impossible today