It doesn’t look good for the rest if giant like Taggart falls
The collapse of Taggart Holdings is one of the most dramatic pointers yet to the fact that Northern Ireland is not going to escape the worst of the recession.
At the peak of its success, Taggart companies were blazing a trail throughout the British Isles, Europe and as far away as New Zealand.
The company grew swiftly, since Michael Taggart bought his first site in Londonderry in 1986, building a single house and selling it for £45,000.
Twenty years later that little piece of speculation and a successful growth strategy had catapulted Michael and brother John into the Sunday Times rich list, bringing such lucrative returns that he was able to take business trips between Belfast and Derry by helicopter, and hire Lionel Richie and Van Morrison to play at his wedding.
But behind the flamboyant image was a serious businessman who built one of the most important construction companies in Ireland.
The financial results for 2006 saw Taggart Holdings delivering record growth with turnover increasing 134% to €164m (£129.6m) with the acquisition of two construction companies. Operating profits went up 103% to over €36m (£28.5m).
That was just two years ago but with the downturn in the housing market, the decline has been dramatic.
Long before last week’s revelation that two banks had called in the administrators, there were rumours that Taggart Holdings was in real trouble.
There had been attempts to restructure the company but they failed. The last straw for the banks appears to have been the recent decision by Irish builder John McCann against boosting his stake in the troubled firm.
Taggart Holdings should have been better placed than many of the developers that cropped up in the boom years to survive these troubled times.
Its long-held strategy of pre-selling its developments had cushioned the group somewhat when the property market went into reverse.
Even now, despite all Taggart Holdings’ troubles, PricewaterhouseCoopers says there are real assets within the company, though it has admitted that the administrators are a long way from developing a successful business plan.
No-one would bet against the Taggarts rising from the ashes.
Michael Taggart last year gave an informative interview to an online journal FYI, in which he described his motivation as “building a business from scratch, moving into new countries and markets, offering attractive and stimulating job opportunities and acquiring and integrating companies into Taggart Holdings. This is what gets me up in the morning”.
Asked to express the biggest challenge facing the construction industry, he said: “Locating and identifying opportunities are the biggest challenges facing our industry. The way forward for us is through acquisitions.
“Identifying and acquiring good local companies operating in our markets who possess the right know-how with good contacts is our main challenge. I believe, given the high price of building land, this is a far more efficient way of growing a construction business.”
He also said: “Going through the recession of the late 1980s and 1990s when the economic picture was bleak was a learning experience.”
A year later, the company is in administration, and reputedly owing around £132m to two banks.
Michael Taggart had seen the trouble ahead, and was trying to circumvent it, but the inevitable bust that followed the ridiculous, investor-fuelled boom in property prices still proved too strong.
The frightening thing is the realisation that if a company like Taggart Holdings can run into such difficulties, then we must assume that this is just the start of an unwelcome procession of moves into administration and liquidation.
Some of these collapses will be at the behest of institutions that lent money like there was no tomorrow, before the bubble burst and the credit crunch bit and, who knows, may even be holding out the begging bowls themselves in the not too distant future. Smaller firms that are also facing trouble will now see the writing on the wall.