The strength of any deal maker is to walk away and cut your losses.
The strength of any deal maker is to walk away and cut your losses.
Consummate Perth deal marker, John Poynton, gave the appearance of having done just that last week when he fronted a WA Business News Success & Leadership breakfast crowd of almost 650.
While he flagged his concerns about the risk-free direction boards are taking, he had clearly decided there was nothing to be gained from adding further fuel to the drama that consumed the Alinta Ltd management buyout and made him a pariah.
Instead, he used the occasion to talk about his upbringing, his business career, his personal foibles and the fact that it was business as usual on the investment banking side of things.
His friend and business partner, Mark Barnaba, does not believe for a second that the Alinta debacle has done anything more than redirect Mr Poynton back to where he works best, among the plethora of deals currently occurring in Western Australia.
“He is still very driven and desirous of making an impact,” Mr Barnaba said.
“I don’t think you will see him slow down.
“This is far more his personality; you will see more of John the deal maker and less of John the non-executive director.”
Mr Barnaba, who has known Mr Poynton for 20 years, said the former Alinta chair was a natural when it came to investment banking.
“John sees opportunity where others don’t,” he said.
“He’s good at evaluating risk and bringing different aspects together that are needed to make a deal.”
Ultimately, a Poynton strength is sorting through the issues and concentrating on the big picture, according to Mr Barnaba.
Perhaps that was part of the message coming though at last week’s breakfast forum, as Mr Poynton explored the peaks and troughs of his business and personal life.
From the highs of helicopter rides above the South West holiday traffic to the lows of treatment for prostate cancer, he provided a warts and all account of his life as one of the state’s highest profile business executives.
It was picture being painted by someone who has been through some tough times and, perhaps, seen themselves in a new light.
He was hesitant, for instance, to provide too much detail on the drama that surrounded the Alinta Ltd management buyout, despite being the focus of vitriolic attacks over his role.
Mr Poynton remained adamant that shareholders had benefited from the MBO.
“The stock went to where it did and it would not have otherwise, and people made money and no shareholders have complained to me anyway,” Mr Poynton told the audience.
“I think that’s the most important thing.”
Shareholders will vote next month on a cash and scrip bid from Singapore Power and Babcock & Brown after the board rejected a second all-cash offer for the utility involving Macquarie and the MBO group.
Another Perth deal maker, Tony Barton, is also one who believes that the MBO was justified.
“When you understand what the shape of the MBO was, it was a way of making people think about the value of Alinta,” Mr Barton said from New York.
“The whole Alinta thing is very unfortunate.
“I don’t think they [the MBO team] ever got the opportunity to put it forward in a manner they wanted it to unfold.
“They inevitably ended up unlocking a very substantial amount of value for shareholders.”
That may well be one deal maker speaking the language of another, but it very much mirrors the view of Mr Poynton, whose only hesitation about going through such a saga again is the pain of personal attacks or, as he describes it, a beating.
“Would you do it again? Probably not if you knew you were going to cop the flak that you did,” Mr Poynton said.
“In an effort to make it look like we did not have an inside run, we were made pariahs.”
In a candid discussion that also touched on his passion for expensive high performance cars, Mr Poynton revealed that, during the height of the MBO controversy in early February, he underwent treatment for prostate cancer.
“I was fairly disorientated while I was reading in the paper what a terrible bastard I am,” he said.
While he largely shrugged off the opportunity to openly criticise those who ultimately derailed the MBO, Mr Poynton did speak in general terms about boards becoming too risk averse.
He warned that companies risked losing performance-driven executives from their boards because of a growing focus on compliance.
Mr Poynton, who remains on the board of Austal Ltd, Burswood Ltd, and Multiplex Ltd, said there appeared to be little upside for directors who wanted to “have a go” and explore options to help companies grow and perform.
“We have an asymmetry in risk because people like me are about trying to get companies to perform and delivering for shareholders,” he said.
“That’s our role. Sure, we can get balance by getting people in who are compliance orientated and making sure the boxes are being ticked.
“If it is all about the status quo then you have a problem. Do people like me and others want to be there, because where is the upside?”
Mr Poynton said he was more experienced with boards that had one or a small number of major shareholders.
“My experience is that boards with major shareholders that have a significant position in the company are more able to focus on growth and development rather than compliance,” he said.
“At Alinta, there wasn’t one major shareholder so it was a case of asking what we were all in it for? We are backing management to go forward and for quite a long time there was a good balance on the board and then when you actually go out and have a go, everyone comes back to talk about compliance.
“I think what has happened as a result of some of this criticism has led me to think that if you have a go and it doesn’t work, you still get sued. And if you have a go and it does work, unless you have the shares where is the upside?
“People have to understand they can’t have it every way.”
Mr Poynton said the problem would become more apparent in an under-performing market.
“In a sense, a rising tide lifts everybody, but when it gets tough, what is the real incentive for directors to stick their neck out and back management to have a go if it doesn’t work and the legal environment hasn’t changed?
“It causes people like me to say ‘well, if I haven’t got any leverage to the stock and I am not going to get any more fees for doing the job but I’m going to get criticised or sued if it doesn’t work, then what’s the point?”
