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Houstoun sends firm into orbit by Sunday Times

Content Team August 15, 2017 mins read

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J.P. Morgan Workplace Solutions’ Content Team comprises a dynamic and talented team of writers and experienced professionals who strive to deliver useful equity insights and simplify complex equity information, all with the aim of helping you to better understand equity management.

Houstoun sends firm into orbit by Sunday Times

The Sunday times logoSunday Times Business Feature 13.08.2017


Logistics tycoon went to Global Shares on maternity cover but ended up taking the company multinational

by Philip Connolly

About once a month, Tim Houstoun gets a phone call from a party looking to buy Global Shares, an international provider of software and services for employee share schemes. Since a soft relaunch in 2015, the firm has been beating big names to some very big customers and the industry has taken notice.

The calls fall on deaf ears. According to Houstoun, he never lets the conversation get as far as them even touting a price.

Sipping a black coffee in Cork’s Maldron hotel last week, the softly spoken Londoner explains that he didn’t spend years building Global Shares up to cut and run as the revenues began to flow in.

The company, headquartered in Clonakilty, Co Cork, uses cloud-based software to provide employee share plan equity administration and consultancy services — winning big corporate clients by offering high-tech solutions in an old-school industry. “We do everything online in an industry where people are still sending faxes,” Houstoun says.

Having flown under the radar for years, the company hit the headlines this month when it launched a recruitment drive to add 80 staff, which will take the payroll to 228 employees across 10 offices in cities including London, Edinburgh, Lisbon, New York and Hong Kong.

More bodies are needed as Global Shares’ client base has jumped from 150 to 250 over the past two years, spread across 25 countries, with more added every week. Global Shares is attracting clients used to cutting-edge tech.

It has been a long road for Houstoun, who joined the company in 2008 on what was supposed to be a very short-term basis. A friend had put him in touch with the firm and he agreed to step in as interim chief financial officer to cover maternity leave.

It was the first time in decades that the Manchester University graduate had put the accountancy qualification he earned at BDO into use. Houstoun had made hay in the logistics sector, setting up Business Direct, a delivery service using automated depots, in 1993. He ran Business Direct until 2007, leaving five years after it floated on the Aim market in London.

Houstoun had planned on taking it a little easier after a decade of commuting between his adopted home of West Cork and the UK. After falling in love with the county on a deceptively warm and sunny holiday at the fishing village of Union Hall a few years earlier, Houstoun and his wife Maire, a teacher from Donegal, decided to bring up their children in Timoleague, a small village near Clonakilty.

Part of the attraction of Global Shares was that it was nearby and part-time, only a day or two a week, which would allow him to spend more time at home.

The company he joined was losing in the region of €200,000 a month, however. It had been founded in 2005 by Californian Carine Schneider and Irishman Maoiliosa O’Culachain, who helped to establish and run the Eircom employee share scheme.

It targeted firms who wanted to outsource the management of company share plans and had built up a decent client base. But while the business plan was sound, Houstoun describes the product as a “three-legged stool”— at the time, the company was a service-only based business, acting as a middleman with none of its own software and no broker licence. “They had good ideas but it wasn’t a great model, it was a disjointed solution,” he says.

A year and some strategic cuts later, the firm was profitable, but Houstoun saw that in its previous guise it was always going to struggle. In 2012, he bought out the original founders with funding from some staff and original investors — including David Raethorne, founder of pharmacy software company Helix Health, and Richard Hayes, founder of financial services group IFG — and set about rebooting the company.

To convince large companies around the world to entrust the running of their share schemes to a small firm in West Cork, Houstoun knew he would have to offer a little more. The company decided to develop its own technology. “People with bigger budgets had tried to write software and failed,” he says.

“There is a track record of banks and large companies not getting it right. Many felt that it couldn’t be done — we were a little naive.”

Initially, the company struggled to find developers willing to go to Cork and instead hired 30 people in India. The decision proved a costly mistake and within 18 months everything was moved back to Clonakilty.

“It was a big undertaking,” says Houstoun. “We thought it would take a year or two with four or five developers: it has actually taken almost six years with an IT team that is now more than 40 people. It was a struggle for a few years, there was a lot to do and it was a bigger project than we ever thought.”

By 2015, the company had enough software written to go to market and set about building up a sales team to grow its 100-strong client book. Last year, the company was licensed by the Central Bank of Ireland as a regulated broker, allowing it to provide a full transaction-based service.

Competitors include heavyweights such as BNP Paribas and Société Générale, but Global Shares managed to sign up Italian insurer Generali and a number of FTSE 100 companies.

“We were winning contracts on the strength of the software and the team we had in Ireland,” says Houstoun. “The industry is changing; our biggest competitor is Computershare, which originally developed its software in the 1970s.”

The company has benefited from not being “burdened” with legacy technology, he says. “That makes it hard for others to compete and is why we are winning a disproportionate amount of business.” In Ireland alone, the company has signed up some of the ISEQ’s biggest names — including CRH and Kerry Group — and is signing up five or six midcap US firms a month. It has just signed up a large Japanese client, with mainland Europe now a focus.

“It is gaining momentum,” says Houstoun. “Two years ago nobody knew who we were. We are still a small brand and some large companies won’t choose us because of our size, but we are moving past that now as we have large companies such as Cargill [the American conglomerate]”.

The company’s revenue has doubled this year to about €12m and is set to continue on a steep upwards curve.

Houstoun is now looking at giving something back to the investors who have stayed with him through some tough years. The company allows any of its shareholders to sell out at the price that it is raising money. Investors have put about €10m into the company so far, with the most staying patient as the company pivoted.

“We are unusual in that we don’t have any private equity money and we don’t want any, because we don’t want to sell,” he says. “Instead, we want to create a big indigenous Irish company and put it in a position to float on Nasdaq or the London Stock Exchange by 2020.”

By then, the company will be “making significant profits to return some wealth to the shareholders,” Houstoun says.

The company also practises what it preaches, with every one of its employees also a shareholder. Around a fifth of its equity is held by staff.

To reach the return he is hoping for, Houstoun is still wearing out shoe leather meeting prospective clients. Last week the company hosted about 40 of Germany’s top companies on a river cruise. He regularly visits one of the 10 offices across the globe.

For Houstoun, the part-time role has become rather more arduous than he anticipated. If the Global Shares’ momentum continues, it will likely be a lot more lucrative too.

Age: 54
Home: Timoleague, Cork
Family: Wife Maire and four children
Education: Studied economics at Manchester University, qualified as an accountant with BDO
Favourite film: The Shawshank Redemption
Favourite book: Beneath a Scarlet Sky by Mark Sullivan

I live about five minutes from our office in Clonakilty, so I am usually in by 7.30 am and work until about 7 pm. I have a bit less travelling to do now as we have grown our sales team, but I still spend about two weeks out of the month travelling to meet clients or visiting our offices. There is a bit more travelling than I would like, but at least it is not commuting to London every week.

I play a bit of tennis and I like poker. I also try to spend as much time as I can with my four kids.

Click here to view the article on the Sunday Times online.

Please Note: This publication contains general information only and Global Shares is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. The Global Shares Academy is not a substitute for professional advice and should not be used as such. Global Shares does not assume any liability for reliance on the information provided herein.