eKourier April 2013 -

Why There Are Two Kennards

tion: it all had to be done with assets. They eventually did it, and two great Australian family businesses named Kennard were created from one. And so the real patriarchs of the Kennard family business were Andy and Neville, who passed away last year aged 74. It wasn’t really Wally. Wally started hiring out cement mixers from his Bathurst machinery dealership in 1948 and moved to Artarmon as a pure equipment hire operation a few years later. Young Nev joined him in the business in the late 1950’s but it didn’t take long for them to start arguing about the direction of the business. Wally was pushing 60 and his 25-year-old son was giving him grief, so he offered to sell it to him, on terms, which Nev gladly accepted. At that point Andy was 20, but it didn’t take long for him to want in (their sister Joan did not). So Andy bought 50 per cent from Nev and the business became a partner- ship that lasted 27 years, but with Neville as Managing Director. Together they grew the business steadily, opening a string of specialty hire operations, as well as a self storage facility behind the hire outlet at Moorebank, near Liverpool in Sydney’s west. The storage business grew quickly and by 1990 they had nine storage locations. Through the 1980’s Neville stepped back and handed management over to Andy, determined to create space for the next generation (as perhaps his own father had not done). And it was in that spirit that the two men could see their own children coming up and wanting to take part, especially Neville’s son Sam. Not only was Nev five years older than Andy, he had started his own family earlier, so that by 1991 Sam was 21, had finished university with a property degree and no job. He became the first of the third generation of Kennards to join the family business. So it was largely for Sam that Neville negotiated the split with Andy, and Sam quickly became Nanaging Director of

Article written by Commentator and Journalist Alan Kohler for Business Spectator 4th April, 2013

T he best way to deal with the delicate problem of succes- sion in a family business, when there is more than one child who wants it, is to give them some each. Often it can’t be done, which is one of the main reasons family businesses get sold – because cash can always be split. The Smorgons famously divided Victor Smorgon’s great legacy nine ways, but that was unique. The usual split is into two, and the classic example of that is the Kennards. Wally Kennard started his hire business in 1948. His eldest son Neville bought him out entirely in the early 1960’s, then his younger son Andy bought 50 per cent from Neville five years later and together they expanded the business into a whole range of new things, the most successful of which was self storage.

So let’s cut to the chase: who won? Well, 22 years after the equal split, Kennards Hire has twice the revenue of Kennards Self-Storage ($235 million versus $110 million) but a third of the assets ($250 million versus $750 million). Neither side would tell me their profit, and who knows what other assets each branch of the family has managed to accumulate, so in the end the matter of whether Neville’s or Andy’s kids did best out of their fathers’ horse-trade back in 1991 remains a mystery. But not only do the Kennards provide a great example of how to successfully deal with succession, they are also a wonderful case study in family business governance. The Great Split of 1991 took several months and “a lot of tears” (says Andy) to negotiate. There were many emotional disagreements over value, with the

“But not only do the Kennards provide a great example of how to successfully deal with succession, they are also a wonderful case study in family business governance.”

And then in 1991 the two brothers split the business down the middle and went their separate ways: Andy got Kennards Hire; Neville got Kennards Self Storage plus a few other assets.

most emotional being their father’s first property at Artarmon in Sydney. But they had started the process determined to sort it out between them and to do it without any cash equalisa-

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Kennards Kourier April 2013