Floating along surely after a brush with disaster

Friday, 01 March 2002


    Elias Jreissati, founder and CEO of one of Australia's fastest-growing privately held companies, the Bensons Group of Companies, leaves nothing to chance.

     He abhors "ad hocery" and insists on strict corporate governance protocols that would shame many publicly-listed companies. Making and losing his first million dollars by age 26 probably has a lot to do with an attitude that says: "In business you will always have desires and goals, but no matter how strong they might be, a business should always be subject to structures and systems that provide discipline and transparency at all times."

    "My experience from the 80s shapes what I do, and it all boils down to one thing: fear. The fear of failure is implanted in my DNA. It drives me."

    Bensons Group - a Melbourne-based unlisted public company controlling a stable of property development, real estate, property management and textiles manufacturing interests - has annual revenues of $44 million and 110 full-time employees. It's a far cry from the city take-away food shop that provided Jreissati with his first taste of business in Australia. Jreissati, 36, arrived in Australia from Lebanon in 1983, and soon afterwards bought the first of three take-away food shops. It was a period he describes without affection as the means to an end. Success there enabled him to dabble in property investment, a passion for which he had an uncanny knack.

    "I fell in love with property then, and my love for property remains as strong as ever," he declares. A millionaire by the time he was 26, Jreissati lost it all a year later in Paul Keating's "recession we had to have". Choosing not to declare himself bankrupt, he set about making good his debts and rebuilding his life, turning his love of property into a job in real estate sales, selling up a storm until he could return to property development. In 1992, Jreissati teamed up with Michael Burstin, forming a partnership that remains the nucleus of the Bensons Group. The two friends and business partners bought a tiny weatherboard home in the inner Melbourne suburb of Brunswick, renovated it and sold it, a pattern they repeated over and over again. By 1995, the business had grown to the point where Jreissati could put away his paint brush for good: "That's when I painted my last fence." The property-development business that took shape was based on an ethos born of Jreissati's brush with ruin. Having lost his first fortune, he was convinced that no matter how successful, "a business is always fragile and you always have to plan ahead of today's success".

    "It was a $1 million lesson, but today I'd pay $10 million for that lesson," he says. "My experience from the '80s shapes what I do, and it all boils down to one thing: fear. The fear of failure is implanted in my DNA. It drives me." What Jreissati describes as "fear" has manifested itself into a commitment to corporate governance and priorities not generally regarded as important for privately-held companies. This includes an active board of directors, succession planning, discreet management teams for each member company, an emphasis on corporate reputation, and a strong belief in the importance of responsible corporate citizenship, with the company donating five percent of its profits to charities each year. We've been very passionate about creating an image for our company that stands the test of time. Traditionally if a company is on a journey, there are people who'll join you as part of that journey, and they're the people we want to attract." A year ago, the company decided to float, leading to the implementation of new internal management disciplines – many aimed at distilling day-to-day control of the businesses from Jreissati.

    "While we have always placed an emphasis on transparency and accountability in a way that ensures that the company is more than just me, redefining my role has been one of the hardest decisions I've had to make, but once I made it, it took on a course of its own," Jreissati says. "To make the company strong I've had to weaken my position. The less the company is reliant on me the more the company is reliant on (other) individuals. It makes the company more transparent. "As an owner-operator you tend to be involved in a lot more areas than is appropriate for a company looking to float. I hope to become redundant in the next three years. It would be a measure of Bensons' success if it reaches the point where it no longer needs its founder." Jreissati believes Bensons' internal systems – including the appointment of a chief financial officer and the introduction of sophisticated financial reporting systems – has given it the strength to support a business three times the size. The company is currently in negotiations to acquire two businesses which would add $22 million revenue to Bensons Group.

    "We believe we need to be of a certain critical mass in terms of revenue – $70 million to $100 million – before Bensons Group is going to appeal to potential investors, especially institutional investors, as well as potential directors. To attract the calibre of directors we're looking for, we must ensure that Bensons is an interesting and dynamic company. We already have an active board, but it's still in its infancy and we plan to make further appointments to the board in the year ahead. By the time we're ready to float, I think the maturity of the board we have in place will ensure that the board will be deciding the fate of the company, not the current owners." Jreissati says his preference is be chairman of the board when the company floats, rather than CEO, but that will partly depend on where the market feels he can make the greatest contribution to Bensons' success. What he is certain about is that he won't be both chairman and CEO of a listed Bensons Group of Companies. "If we're going to attract proper investor interest we need to demonstrate that we have an even-handed, impartial board protecting the rights and interests of shareholders," he says.

    Jreissati believes Bensons Group will be ready to list in 12 months, but emphasises that Bensons' future is not dependent on floating. Even if the "market realities of the day" dictate against a float, Jreissati believes his company will be the better for having prepared for one. "Even if the float doesn't go ahead, I'm a great believer that nothing in this world stands still, life is about movement. You've got to aim towards goals whether you achieve them or not. Our goal of floating has provided us with a level of clarity and a level of sophistication that has made us a much stronger company," he says. "If we don't float in 12 months' time, I will be able to look back and say that, yes, preparing for a float has added costs to running our business, but we're a better company for it."


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