Case Studies Blog

Big business is good business or is it?

16th January 2018

 

 

One of the biggest advantages of being a big business is that banks will lend you money so that you can buy other businesses and become even bigger. The problem comes when these businesses are forced to take on more and more work in order to service the borrowing costs. In the case of Carillion a combination of £1.5 billion in debt and significant cost overruns on a number of public sector construction contracts has led to the UK’s second largest construction company going into liquidation. As a consequence 20,000 UK jobs are at risk and a similar number overseas.

Whilst this is bad what is worse is that all the companies that Carillion absorbed on its way to bigness are also lost forever.

Mowlem was founded in 1822 by John Mowlem. Awarded a Royal Warrant in1902. In striving to grow Mowlem over extended itself with losses of over £180 million in the mid 90’s and was acquired by Carillion in 2006. Alfred McAlpine acquired by Carillion 2008 after it rather lost its way. Now Carillion has made the same mistake as the companies it acquired.

Is this yet another example of UK companies apparent inability to make the transition from mid-sized to big business? Have we lost the desire we once had as a nation for global domination or is it simply that our best businesses get acquired by foreign investors before they ever get a chance to be big and successful?