MARLBOROUGH: Bought from a liquidator for just €7,500 10 years ago by former plumber David McKenna, recruitment group Marlborough International is a classic example of the corporate rags-to-riches-to-rags story.
When Mr McKenna floated the company on the Dublin and London stock markets in late 1997, it was at the height of the economic boom. Such was the demand for Marlborough shares that, within a few months of the flotation, Marlborough was worth close to €150 million and Mr McKenna's paper wealth was not far short of €70 million. At the time of the flotation, Mr McKenna sold €5 million of his holding but retained a controlling stake, which has since fallen to around 45 per cent.
Marlborough's first few years as a public company saw it go from strength to strength.
The economic boom and the subsequent rise in the recruitment market allowed Marlborough expand rapidly, both organically and through acquisition. The company first expanded into Britain with the €27 million acquisition of the Walker Hamill recruitment group. Later, Marlborough paid €5 million for the Ann O'Brien recruitment company in Dublin and spent €1 million on the Kingston business in Galway.
By February 2000, turnover had grown to more than €70 million and the company was churning out pre-tax profits of more than €6 million.
From there, things began to go pear-shaped for Marlborough. First an online recruitment website called fillthejobs.com was set up but later closed at a cost of €350,000. Then came the embarrassing saga of the bid for e-pawn.com, a US online retailer, whose advisory directors included former Taoiseach Mr Albert Reynolds.
That acquisition collapsed after e-pawn.com had its shares suspended by the Securities and Exchange Commission and its chief executive, Mr Eli Liebowitz, was arrested by the FBI for alleged securities fraud.
But the flirtation with e-pawn.com was only a forerunner of more fundamental problems in Marlborough's home market. Talks to buy part of the business of the British group Springs were called off in late 2000 and, in early 2001, Marlborough issued the first in a series of profit warnings.
In May 2001, Marlborough plunged to a half-year loss of €1.48 million and shocked the market with news that failure in its debtor control system meant that the company would have to write off some €3.5 million in bills.
At the same time, it emerged that Mr McKenna was trying to put together a buyout of the 55 per cent of Marlborough he did not own, but that also collapsed when Mr McKenna failed to get the finance for the buyout.
The core recruitment business went from boom to near-bust as the dotcom-fuelled economic gallop came to a halt and Marlborough was forced to write down the value of its acquisitions by €15.75 million after an impairment review.
More than 100 jobs were cut, with employment falling to around 300.
The company has come almost full circle with yesterday's bombshell of the suspension of trading in the company's shares because of financial uncertainty and the subsequent appointment of a receiver.
