John Garfield does not look like a man who has been up all night negotiating the final details of the most exciting deal of 2004 – buying back the business he founded 30 years ago.
The dapper, quietly spoken 55 year old looks a little tired perhaps, but is bright-eyed and clearly exhilarated. And his enthusiasm is infectious – there is a palpable sense of excitement in Charcol’s Holborn-based head office. It really does feel like a new era for the beleaguered firm.
And this is exactly what Garfield intends his return to herald. Garfield co-founded John Charcol in 1974 and retired in 1998 when he sold the company to Warburg Pincus, the US buyout firm, in a deal that made him and Ian Darby, group commercial director of Charcol, multimillionaires. Bradford & Bingley later bought Charcol for £102.5m in 2000.
Garfield has spent the past six years pursuing other interests, spending the majority of his time on the beautiful Spanish island of Ibiza with his wife and children, travelling and enjoying an uncharacteristic life of leisure. He did not intend to have any further involvement with Charcol and when first approached with the idea in May this year, he was initially unenthusiastic. But he was unable to resist the opportunity for long.
“I think The Godfather put it best,” says Garfield. “It was an offer I couldn’t refuse.”
It is an apt analogy. Even in the six years since he disposed of the business, Garfield has always been an important part of Charcol’s identity. Indeed, he and the other two founders – Charles Wishart and Colin Studd – gave the business its original name, John Charcol. And now Garfield wants to bring back the entrepreneurial edge that first made Charcol so successful.
“It’s good to be back,” he says. “There is an element of challenge to this, which will be fun. There is also an element of having done it before, which gives you a certain amount of confidence that you know how to put it right, to change it in ways that will bring back the entrepreneurial spirit. I intend to get it back to the position where it was before – it’s going to be exciting.”
Garfield’s own entrepreneurial spirit has an impressive pedigree. He founded Charcol at the tender age of 25, but had already been working for himself for many years before that.
Brought up in London’s affluent Kensington and Chelsea areas, Garfield had a good education but chose to go straight into the workplace after he left school rather than go to university. After a period of travelling, Garfield soon found he was a natural businessman.
“It was the 1960s, the time when the teenager began to reign supreme,” he says. “You no longer had to go off and be articled. I was fairly wild and did things that you could do for the first time then.”
At 17 Garfield became involved in the Isle of Wight festivals, where stars such as Bob Dylan and Joan Baez began their careers.
“I was on the money side, running stands. Then I had little shop on New Kings Road. I was one of the first people to import those long white cured sheepskin coats and we used to sell out of them every day.”
Attempts at getting a ‘proper job’ failed, with Garfield never lasting longer than a couple of days. “I made quite a lot of money quite young, and trying to do a job where you earned in a year what you were making in a week before working for yourself was hard. Perhaps I am the wrong sort of person to be employed by other people.”
Then came Garfield’s first foray into financial services. His father felt his son should get involved in, as he put it, a “respectable profession”, and brought him in to work at his one-man band insurance brokerage. This was November 1971, the beginning of the property boom. Setting a trend for the future, Garfield landed on his feet.
“At the time the main way to get a mortgage was to save with a building society until it deigned to lend you some cash,” he says. “By luck I had found a new way of obtaining the money, in the form of an organisation relatively new to the UK and new to the mortgage market, with a far more sophisticated treasury function than building societies, which didn’t require people to save.”
That company was Citibank. Garfield placed a small advert in The Times and almost immediately a permanent queue formed outside the office. At that time Citibank sold its money at 0.5% more than building societies but at a fixed rate, at that point 8.5%.
“I did loads of these Citibank mortgages. Six months later, interest was 11% and my clients were ecstatic.”
This led to the foundation of Charcol with Wishart (Studd had no further involvement in the business after it was launched).
“I completely lucked out,” admits Garfield. “But I also understood better than my competitors how the market worked and could work in the future. Charcol grew from the fact that we could supply mortgages to everybody who required them. Charles and I were lucky that it happened at that time. But we also worked very hard.”
This proved to be a winning combination. Charcol was the first brokerage of its kind and dominated the SouthEast market for many years.
But there is no doubt that its star has waned in recent years. B&B, despite paying a vast sum for the business, failed to develop Charcol, concentrating instead on its The MarketPlace brand. Garfield will not say if he thinks B&B paid too much for Charcol back in 2000, given that Garfield and his co-buyers have taken the business back for a fraction of that sum, almost certainly less than £10m, although he refuses to be drawn on the exact figure.
“Let us say that the vendors were very happy with the price that was paid in 2000,” he says.
“Whether it is too much or not is subjective it depends on what is taken out of the business. Businesses are worth different amounts to different people depending on what vision they have for it.”
Nor will Garfield explicitly criticise B&B’s handling of his brainchild, although he acknowledges that Charcol is no longer at its peak.
“I think B&B was trying to pick up on some of the things which Charcol did when it was the foremost broker around and translate those into The MarketPlace. It’s taken what it felt it could take and doesn’t need Charcol any more. It would be unfair of me to criticise or comment on what B&B has done, but these businesses are people businesses and B&B hasn’t denuded Charcol of good people.”
Maybe not entirely, but Charcol has had serious staff retention problems. A number of other firms sprang up in its image over the years, many set up by ex-Charcol staff.
Garfield numbers Hamptons International Mortgages, Savills Private Finance, THINC, Purely Mortgages and London & Country as Charcol’s main rivals, but sees this competition as healthy.
“It’s great, it’s like being a good restaurant,” he says. “If a few more spring up nearby, it doesn’t mean you do any worse. In fact it often means you do better.”
Garfield clearly has huge respect for his competitors. “The fundamentals of the mortgage market have not changed much,’ he adds. “What has changed is that there are many more good brokers in the field. Savills, for example, is a quality outfit. These businesses are about customer service, meeting customers’ needs, and that is what the broking market is fundamentally about. More brokers around is good for the consumer. It should keep all of us on our toes, and I certainly intend to keep them on their toes.”
Details of the new Charcol have not been finalised, but Garfield promises there will be “major restructuring”. And he intends to be personally involved every step of the way, in true godfather fashion. He is officially executive chairman and this will be his role going forward. But he also considers himself interim chief executive.
“Until I replace myself in that role I will be absolutely hands-on,” he states emphatically. “That’s my style. I will get involved with everything. I intend to set up the culture, set the scene, to make a myriad of changes pretty quickly.”
Garfield does not intend to expand the core business beyond mortgages. “Charcol is going to have an association with a company that is better qualified than we are to offer investment advice. But we’re not going into the wider financial services market direct. ICOB is coming up, so we will of course be involved with a lot of the products which are natural alongside a mortgage, such as term assurance. But investment advice is a different game, a different mindset.”
Nor does Garfield have particular ambitions to make Charcol a truly national broker, such as Savills claims to be.
“We’re pretty south of England and more particularly South-East based. I don’t think we ever were a national broker, although we might be a national brand. But I would certainly like us to be the dominant broker in the South East again, and I believe we will be.”
I ask if he is back for the long term. The answer is unequivocal. “An emphatic yes to that,” he says. “I’m not here for six months or a year. We’re in here for a goodly period of time.”
Garfield believes the housing market is always worth investing in, because of the permanent imbalance of supply of land and demand for housing.
“House prices and the ownership of property will be a reasonable investment over any given period of time,” he says.
“I know that the past isn’t necessarily a guide to the future, but this is a market with strong fundamentals. Regardless of what goes up and down in terms of pricing, the number of properties being traded doesn’t vary an enormous amount. Any downturn that analysts say we may be heading for shouldn’t particularly affect volumes.
“The mortgage market is going to remain resilient for as far as any of us can see ahead. And I intend to still be a part of the market for certainly the next five years.”
And it is not just the return to Charcol and the mortgage market that he is committed to. Garfield is also clearly delighted to be back in his native city.
“I love London and having been away I see how much cleaner it is,’ he says. “It is a remarkably expensive place to be, but there is still something wondrous about London. I appreciate the buildings and the city more than I used to having had the break.
“In some ways I’ve lived the dream, but the dream is never entirely all it’s cracked up to be. While I wasn’t necessarily planning to do this, I was looking forward to coming back to the UK about now anyway.”
London is also an ideal place for Garfield to pursue his eclectic range of interests. He describes himself as something of a dilettante. “I’m interested in a lot of different things without being a specialist: politics, sport, charity, dinner and good conversation, television. I’ve particularly missed going to shows. I also love the cinema and am slightly involved in films commercially. London is a great place to be for all these things and all my friends are here.”
And the most important of these friends is Wishart, who is on Charcol’s board, but with a largely hands-off role. Garfield is clearly devoted to his old partner.
“Charles Wishart is my greatest friend, my long-term partner, and we’re always involved in different things together,” he says. “He is someone who comes up with good ideas and I can equally bounce things off him. Some people say that being the boss is lonely. It isn’t, because I’ve got Charles.”
Garfield’s vision for his company is firmly centred on its people. The personal touch was evident as soon as he stepped through the door. The first thing he noticed was a huge glass coffee table by the sculptor Danny Lane, which he bought in 1987. Weighing half a ton, the piece is exactly where it was placed 17 years ago.
“I would have taken it with me if it didn’t take at least five people to move it,” he laughs.
One of his first management decisions was to buy four bunches of flowers for members of staff who helped him settle back in.
It is this focus on people that may do more than anything else to set Charcol back on track. Giving the company and its staff such a charismatic central figurehead can only be a positive move for the future of this still robust brand. Like Garfield himself, Charcol looks set to rise, phoenix-like, from the ashes.
“Charcol has enormous potential,” says Garfield. “It’s good to be back, and I’m really looking forward to the future. It’s great working with old and new faces and seeing the terrific spirit that is still in this company.”