Unity in diversity

Like any marriage, a business partnership must endure the rough with the smooth and, ten years on, the merger between Goffs and DBS has overcome the hardships of recession and bad debts

Ten years ago Henry Beeby, then Managing Director of Doncaster Bloodstock Sales (DBS), was contemplating the imminent merger between his company and Goffs, the Irish sales house. It made a natural fit, since the two entities were largely operational in their respective countries at that time.

There was little scope for either to grow on their own. Goffs wanted to consolidate its place in the bloodstock market after efforts to diversify had proved unproductive, while for DBS, part of the attraction was that it was gaining a foothold in a country where the Celtic Tiger was roaring its head off.

DBS has undergone a renaming as Goffs UK

Beeby raises a wry smile at the memory. Back then, Ireland was savouring an economic miracle. The country was effectively being rebuilt on a far grander scale, largely with money flowing in from Europe.

This, in turn, fuelled a property boom that left Dublin values comfortably outstripping those in London. Three months before the merger, the Irish Stock Exchange hit an all-time high of 10,000 points. The only way was up.

When it came, the crash was brutal. It started with the global crisis soon after the deal was signed, although Goffs (Ireland) still generated annual turnover of €120 million in 2007. One year later and Ireland’s economy had imploded. By 2010, when the recession bit hard, Goffs’ annual take had slumped to €45m.

“You could call it a baptism of fire,” says Beeby, who was appointed Group Chief Executive when the two companies came together. “I remember after one particularly difficult board meeting Stan Cosgrove (Manager of Moyglare Stud, which owns 20% of Goffs) said to me, ‘I bet you wish you’d never come to Ireland.’ And I replied, ‘No, I can honestly say I have never regretted it’.”

Beeby, 51, does not entertain negative thoughts. He looks for the positives in everything, although it becomes clear as he reminisces that even he sometimes struggled to do that during the worst of it.

The picture is very different now. Last year Goffs returned turnover in Ireland to its pre-crash levels, generating trade in excess of €120m in its 150th anniversary. Add in turnover of €49.8m from DBS, which has since been renamed Goffs UK, and the group posted annual receipts of €170m.

It is not just the balance sheet that has changed. The perception of Goffs has changed with it. It has been a long road back, with Beeby citing the appointment in 2005 of Eimear Mulhern as Chairman of Goffs Bloodstock Sales as a pivotal turning point.

“Prior to that, I think it was felt that Goffs had slightly lost its way in terms of bloodstock,” he reflects. “It was doing other things and decided to reconnect with the bloodstock industry. Eimear was given two primary tasks: to break into Britain, and to recruit an industry professional to run Goffs on a daily basis.

“Eimear looked around, and rather than take on Tattersalls and DBS, she felt that Goffs and DBS had a lot in common. I had been a guest auctioneer in Goffs from 2000 to 2004, so I had a bit of a link, and flatteringly, she felt I was the man to run the [new] company.

“When we started talking Eimear laid out her stall pretty quickly,” Beeby continues. “My first reaction was to remind her that Goffs tried to buy DBS four years earlier, and she said this would be a merger, not a buyout.”

The dye was soon cast, although Beeby kept hearing one message from the DBS board and its clients. DBS had established a valuable niche in an intensely competitive market. It had to retain the identity it had created into the bargain.

“I remember one of our vendors from the Borders telling me why he enjoyed selling with us,” Beeby recalls. “He said, ‘If it goes badly you’ll take the bollocking and still buy me a drink. And if it goes well you’ll organise the party.’ There’s a lot in that.”

The merger brought together two firms with strengths in different areas. DBS traded as the prime source of affordable two-year-old winners, headed by its breeze-up sale, which it introduced to Europe 40 years ago. It also hosted the Premier Yearling Sale, which corralled an attractive catalogue of precocious physical types. Goffs had an elite yearling sale, a high-end breeding stock sale and the increasingly popular Arc horses-in-training sale in France.

It was a torrid time but it was ridiculous to suggest that the company was in financial difficulty

In consequence, the expertise within the respective staffs made a tidy fit, although the recession meant that Beeby was initially preoccupied with stemming costs.

“I did a review of the business after I’d been there for six months,” he says.

“The cost-cutting process was hastened when the crash came but it wasn’t a question of going in and changing things. It was more about tweaking things, making it a more personal business. Eimear had already been doing that. With the greatest respect, the customer-friendly side of it had slightly been lost.”

There were times when the new alliance was on its proverbial knees, with rumours circulating that the company might not survive the onslaught. Gallows humour had taken hold in the offices at Goffs.

“At one early meeting I emphasised to those present that the customer is always right,” Beeby recalls with a smile. “Quick as a flash [Goffs Director] Nick Nugent replied: ‘So if somebody comes up to me and says Henry Beeby is a prat, does that mean I have to agree with them?’”

The nadir arrived in 2010, when the company posted losses of €6m, €5.7m of which was bad debt from buyers whose businesses evaporated in the blink of an eye. It was imperative for Beeby to restore the company’s credibility with its bankers and some shareholders.

“It was a very torrid time,” Beeby reflects, “but it was still ridiculous that people were suggesting the company was in financial difficulty. I’d worked for DBS for 25 years when we had no assets, we rented everything, we worked off bank facilities every year yet nobody ever asked us whether we could pay. Now I’m working for millionaire shareholders and people were worried about it.”

As for those annual losses, they were mitigated when Goffs sold 27% of its one-third stake in Arqana, the French sales house. The Aga Khan, already a prominent shareholder in both Goffs and Arqana, bought that 27% holding and the books rebalanced.

With the financial black hole filled, Goffs now had a pressing need to reassert itself within the bloodstock community. This was a new challenge for Beeby, since Goffs measured itself against Tattersalls, the perennial market leader.

He understood the inherent difficulties but when, in November 2009, Jim Bolger sent Lush Lashes to be sold at Tattersalls at the end of her stellar racing career, he resolved to act.

“After Lush Lashes made 1.8 million guineas I rang Jim and asked him what we had to do to get him to bring these horses to Goffs,” Beeby says. “He said we had to achieve similar prices, and I said we couldn’t do that unless we had the horses.

“Fair play to Jim: he rang a couple of years later and said he wanted us to sell Banimpire and two foals from the first crop of Sea The Stars,” Beeby continues. “Banimpire made €2.3 million and the Sea The Stars foals made €850,000 and €800,000. To me, that was a real turning point. It demonstrated what we could do.”

Two years later and another landmark was reached. Australian owner-breeder Paul Makin solicited offers from sales companies to sell his entire bloodstock portfolio, and plumped for Goffs.

“We were basically a 33-1 shot to get it but we made our proposal, saying we would make it the centre of our world, and Mr Makin was kind enough to say that we’d demonstrated a passion he hadn’t previously experienced,” Beeby relates.

“It was a big deal because it brought people to Goffs from all over the world. And we got the highest price at any breeding stock sale in 2013 when Chicquita made €6 million.

This year saw the second Goffs boutique sale at Aintree

“In that year we also sold the Montjeu-Finsceal Beo yearling for €2.85 million, and in 2015 we sold a Frankel foal for €1.8 million and a Frankel yearling for €1.7 million. Irritatingly, some people said the sale of Banimpire was a flash in the pan but we followed up over and over again, getting top-dollar prices. Then we handled the Wildenstein dispersal.”

That was an unusual event in Europe in that Goffs’ senior personnel acted as auction-ring agents for US buyer Peter Brant’s White Birch Farm, which spent €7.51m at the dispersal. Beeby heard the whispers that all was not what it seemed.

“We work in a funny space,” he says. “All sorts of chat goes on. What I can say unequivocally is that Peter Brant paid us the money
he spent on the horses, and we paid it over to David Wildenstein. Our shareholders and board demand what we would give them as a matter of course, which is absolute transparency and integrity.”

Beeby believes the last ten years has brought a greater industry-wide acceptance of Goffs. His overall missive is to provide strong competition to the market leader.

“We’re getting more right than wrong, we have a very strong team ethos and we make a big point of being approachable because this is a personality-driven business,” he says.

“Since the merger we have brought the two brands closer together. We have the same level of service across every sale at each of our six sales sites. There is only one month of the year when we don’t have a sale, and we have sales at every level, from lots worth €2 million right through to €1,000.

“We also have a reputation for innovation,” he says in closing. “The [eve-of-Royal-Ascot] London sale has been a wonderful addition, and we are always looking for the next big thing. The long-term plan is to increase market share and I do think it’s important that the market leader has a strong and vibrant competitor, which is to the benefit of British and Irish breeders.”

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