This week's successful flotation of Clonmel-based engineering company Kentz on London's AIM market represents a remarkable turnaround for the firm and its chief executive Hugh O'Donnell. In the space of 14 years Kentz has gone from the brink of bankruptcy to being one of the leading international players in its field.
The firm now known as Kentz was founded by electrical contractor Michael Kent in Clonmel in 1919 and grew rapidly over the following decades. Michael Kent ran the business until his death from a heart attack in 1948 when it was taken over by his brother.
By 1963 the company had shrunk to just six employees and seemed destined for extinction. However, in that year it was taken over by Michael's son Frank.
The firm, now known as MF Kent, expanded quickly during the 1970s and 1980s. It was one of the main contractors employed to upgrade the Irish telecommunications network to full digital standard in the early 1980s and also began to expand abroad for the first time.
Then in 1987 Frank Kent, who famously told a friend at the time that he had no wish to be the youngest man in the graveyard, sold the firm to its managers including general manager Gus Kearney.
Under Kearney's leadership MF Kent stepped up the pace of growth. The company's turnover quintupled from just IR£65m in 1988 to IR£326m by 1992 as it won contracts in locations as far afield as Singapore, Spain and Africa.
However, as anyone who has been in business a long time can testify, while any fool can grow a company, the trick is to do so profitably.
By the early 1990s it was becoming increasingly clear that MF Kent had grown too quickly in too short a space of time. A number of the new contracts, particularly a contract to refurbish the Hotel des Arts in Barcelona in advance of the 1992 Olympics, turned into serious loss-makers.
In January 1994 an examiner was appointed to MF Kent. The company was rescued when a group of Malyasian investors injected IR6.75m while its existing shareholders stumped up a further IR£800,000 in a rescue package which gave the Malaysians a 60pc stake in the business, which was later increased to 80pc,
Under Malaysian control Kentz, as the company was renamed after the 2004 rescue, has put its racy past behind it. Instead of chasing business at virtually any price it has become far more focused. Kentz now concentrates on servicing a number of specific sectors, particularly oil and gas, infrastructure, telecommunications, water, power and the design, construction and commissioning of large-scale industrial plants.
Today's Kentz is a truly multinational company, Although it is registered in Jersey it still operates from its headquarters at Gurtnafluer, close to Clonmel, Co Tipperary. At the end of 2007 it had 8,500 staff employed in Sub-Saharan Africa (mainly South Africa), the Middle East, the Far East, Russia, North America, the Caribbean, Australia, Ireland and Norway. It is currently involved in the development of projects in no fewer than 23 countries.
In recent years Kentz has experienced strong growth with turnover from continuing operations rising from $148m (Kentz reports its results in US dollars) in 2004 to $370m in 2006 while its pre-tax profits rose from $5.4m to $25m over the same period.
This growth was maintained into the first half of 2007 with the group recording pre-tax profits of $11m on a turnover of $244m, up from $6.7m and €152m respectively for the first six months of 2006.
Despite the growth of recent years Kentz is still a slightly smaller company in turnover terms than it was at its 1992 peak. However, this is a situation which will almost certainly be rectified shortly if Kentz can maintain its recent pace of expansion.
Hugh O'Donnell was born in Limerick 42 years ago and graduated as a mechanical engineer from NIHE (now the University of Limerick) in 1987. Opportunities for newly-graduated mechanical engineers were thin on the ground in the depressed Ireland of 1987 and the young O'Donnell emigrated to South Africa.
After working for South African mining giant Anglo-American for four years he joined MF Kent in that country in 1991 and has remained with the company through its various incarnations ever since.
O'Donnell rose rapidly through the ranks at Kentz. After managing several projects for Kentz in Africa and Asia he was appointed head of the company's African operations in 1997. In 2000, at the age of just 35 he was appointed managing director of the entire group.
Kentz is very much a people business. Its success depends on it being able to attract and retain the best possible people. The company also devotes enormous time and effort to upgrading the skills of its existing staff.
Not only does it have a fully-developed 24-month graduate development programme but it also has its own in-house executive diploma in leadership and management which can be upgraded to a full MBA.
When it comes to such continuous education and training O'Donnell has very much led by example. In 1999 he received an MBA from the University of Surrey in the UK and in 2003 he was conferred with a doctorate in management and organisational behaviour by the University of Southern Cross in Australia.
Before the flotation, Kerbet, a company owned by the original 1994 Malaysian investors, owned 80pc of Kentz with O'Donnell and Noel Kelly, another Kentz executive director, each holding 10pc.
As part of the flotation Kentz sold 16.3m new shares to investors at Stg115p each to raise the company a gross Stg£18.8m on which it paid costs of Stg£3.2m. In addition O'Donnell and Kelly sold a quarter of their shares for Stg£2.875m each while the Malaysians sold 30 million shares for Stg£34.5m. Even after selling 30 million shares Kerbet still owns a further 30 million Kentz shares, 25.8pc of the total with a current value of Stg£37.8m. The Malaysians received a further $18.8m for a tranche of shares which they sold to the senior management group.
While this might seem like a pretty impressive return on their original 1994 investment it must be borne in mind that they waited 14 years for even a partial exit. Few venture capital shareholders would have been as patient.
After the scatter-gun approach to growth which the company adopted with such disastrous consequences in the late 1980s and early 1990s, Kentz now pursues a much more disciplined strategy. As well as focusing on particular sectors it has also concentrated on winning the trust and confidence of a relatively small number of large clients.
These include construction giants Bechtel and Kellogg Brown & Root; oil giants Exxon Mobil, Royal Dutch Shell, BP and Chevron; chemical companies Dow, DuPont and pharmaceutical companies Pfizer, Schering Plough and Eli Lilly. For these key clients Kentz is prepared to go anywhere, anytime.
At the moment it is involved in the development of Shell's huge oil and gas field on Sakhalin island off the east coast of Siberia, which is located in some of the world's most inaccessible and inhospitable terrain.
One of the stated aims of the flotation is to allow Kentz to give shares in the company to senior employees. It argues that the ability to offer equity is essential when seeking to recruit and retain the high-calibre people who are crucial to its future success. Following the flotation senior Kentz management other than O'Donnell and will control about 11.4pc of the shares in the company.
With three-quarters of Kentz' sales and virtually all of its profits coming from the Middle East in the first half of 2007, the company is almost totally dependent on the future direction of oil prices.
The challenge facing O'Donnell and his senior management team will be to ensure that its reliance on what is traditionally a volatile region will hinder its performance as a quoted company.