Founder calls for buyout at Slater Hogg Howison

ROY Slater, the veteran co-founder of Slater Hogg and Howison, is urging management of the up-for-sale estate agency to buy the chain back for themselves.

The 26-branch operation, which is based in Clarkston, Glasgow, was put on the block last week by Bradford & Bingley as part of a portfolio bought from Lloyds TSB for 56m in 1998. Slater, 59, set up the business in 1975 with Iain Hogg and Geoff Howison and still works as a consultant although he sold his shares in 1984.

"Personally I would applaud it if it went back to private ownership," he said. "There are plenty of good people in the company and if they could buy it, it would be the best outcome for the business."

Industry pundits agreed this weekend that the bank ownership model had failed and estate agents had proved they work better as independents.

Michael Luck, the Slater Hogg managing director, and Alan Baxter, head of the new homes team, are the favourites to lead an MBO if they can assemble the finance.

Luck declined to comment on his plans but said: "We are a strong and profitable Scottish business and our [300] staff need have no concern over this. Whoever buys the business will certainly want to keep what is a very successful operation."

Bradford & Bingley stressed it wanted the best value for its shareholders and would consider any offer for all or part of the business, including potential MBOs. It is selling non-core assets through investment bank Goldman Sachs to save 40m a year.

John Brown, the head of DTZ Residential in Scotland, said banks and building societies had a long track record of destroying estate agency franchises by viewing them as another distribution channel for financial products.

He added: "The strength of Slater Hogg is in the people in its branches and the performance of these branches. I would have thought an MBO was the best and most successful outcome because people know their own performance, their own market, their own ability and share and should be best able to talk about their opportunity to a bank who could lend them money."

He added that B&B would get more money if it broke up its portfolio and sold its assets as separate components or regional blocks.

The property businesses being sold include the branded B&B Estate Agency and SecureMove property services units.

As a combined unit with 3,000 staff, B&B said its property services division turned over 150m last year but made no material contribution to profits. One insider reckoned the price tag on Slater Hogg was offers over 20m, the same ballpark as its sale price eight years ago. "I’m sure people like Alan [Baxter] have sufficiently good contacts in the market to get the finance they need to secure their future," he added.

One Scottish property investor said estate agencies rarely worked as part of big businesses because their culture had to change to fit the requirements of the parent company.

Other industry sources suggested Slater Hogg lacked the calibre for an MBO because the best of its management had quit to set up rival firms such as Corum, the upmarket Glasgow chain that actively shuns bolt-on financial products.

"What you’re seeing is confirmation that institution-owned estate agents don’t work," one said. "The only way they’re going to work long-term is if they’re privately owned, where the owner is driving the business because he has a passion for it. Who in an institution is going to stay in the office until 10 o’clock at night or work seven days a week for the passion of it?"

Observers predicted other parts of B&B would return to their management, including Glasgow independent financial advisory business Aitchison & Colegrave, part of the Charcol mortgage broking and IFA network that is also on the block.

B&B’s distress disposal has heightened speculation that the company itself is now more vulnerable to a takeover.

Barclays and GE Capital, the financial arm of General Electric, have been touted as possible bidders.