Tom Roche knows a thing or two about family business.
s a founding director and current chair of NTR, the family-controlled renewable energy and infrastructure firm, he’s the biggest shareholder.
He’s married to Anne, daughter of PV Doyle, the founder of the Doyle Hotels holding company in which the Roche family have a 25pc stake.
His son Conor is chief investment officer of Woodford Capital, a private investment company owned by the third generation of the Roche family, which manages the family holdings in NTR, the Doyle Collection, and other investments, including hospitality and real estate.
The family, including the other children, are shareholders in the Sharing Foundation, a charitable organisation that holds shares in Woodford.
The various cross-over relationships neatly symbolise the structural complexity of a family enterprise, where family identities overlap with commercial obligations and are mediated through impersonal structures to keep everybody aligned.
Add outside investors to the mix and the complications only multiply.
It’s why Roche preaches the gospel of governance and also why he is a driving force behind both DCU’s National Centre of Family Business and the Family Business Network – two institutions trying to build the advisory infrastructure big family businesses need.
“The broad principle has to be governance,” he says. “And the family has to have governance in three areas: the family itself, the executive branch or the family office, and the business itself. This will be demanded by outside investors.”
In Roche’s case that means first governing the Roche family, then Woodford, and finally its various holdings, principally NTR.
“By adopting a corporate governance code like the UK stock exchange code, that solves a lot of issues,” he says. “Independent directors bring objectivity and professionalism and look after other stakeholders.
“It’s largely about gaining strength from each other. The family brings passion, entrepreneurship, legacy, values and will normally have a long-term vision. A third party will bring capital and standards.
“Where family and outside capital can fall apart is when they go outside that agenda. But if you get it right, it can be very, very good.”
It’s a formula that clearly has worked for the Roches. After building initial wealth through Roadstone – a family business a generation before Tom – and its merger with Irish Cement to form CRH, Roche went on to found NTR as a toll road company, which later became an environmental infrastructure business, taking in external capital along the way.
Total family wealth is estimated to be in the neighbourhood of €450m, making the Roches among the richest in Ireland.
But it’s not all structures and spreadsheets. At the heart of any family business, Roche explains, are the same emotions that run through any family. That requires deliberate and delicate management, both inside and outside the commercial context.
“The family needs to face issues and have their act together around roles in the business, succession and remuneration,” Roche says.
“Outside investors will bring demands, but the chief influencer of the business is the family sitting at the table together. You have to give due deference to who is driving the business. Independent directors are independent, but there are certain lines they can’t cross.”
One of the chief areas of tension between family and outside capital or independent directors is how much weight to put on profitability over so-called ‘softer’ concerns.
“People who run family business are very conscious of reputation and standing in the community
“The wishes of the family are not always strictly about the dollar.
“People who run family business are very conscious of reputation and standing in the community... It’s not the same as being a fund manager.”
Perhaps because of that, some family businesses in Ireland have adopted a portfolio approach, where wealth accumulated through one or more family-founded businesses is collected in a family office and invested in other businesses, often outside their core area of expertise.
It's an approach that de-risks and diversifies family wealth, while allowing for an efficient use of capital and the deployment of accumulated managerial expertise. It also solves some of the stickier problems around roles, remuneration and succession by depersonalising ownership somewhat.
“The challenge is to keep the family engaged,” says Roche, adding that going public by listing on the stock market can sometimes be a solution for substantial family enterprises.
“Some take the view that it solves problems by creating liquidity in shares, but there are downsides to being a listed company too. The whole administration is basically a pain in the face. Mrs Murphy the shareholder has a voice just like Irish Life or any big shareholder. She may not have their votes, but she has a voice.
"Also you lose your privacy,” he says. “That puts a lot of families off going public.”
Roche says the most important thing for family companies is being able to get trusted advice.
“My interest in getting advice grew from family disputes. You have to be willing to get into the soft issues like relationships. It’s essential.”
