Northumbria University’s Faculty of Business and Law actively champions responsible management, aligning with the UN Principles of Responsible Management Education (PRME). As part of their Responsible Business Seminar Series, which aims to connect leading figures with the academic community to explore vital topics and foster research, the Faculty was honoured to host Dave Meldrum, CEO of Meldrum Construction, recently for a session on Succession Planning via Employee Ownership. These seminars are always free and open to the public. For any inquiries, please contact ron.beadle@northumbria.ac.uk. Further information regarding Northumbria University’s Responsible Business initiatives and an archive of past seminars can be accessed via their website.
Dave Meldrum, Group CEO, founded Meldrum Group in 2001. Dave shared that his professional journey commenced in 1985, following his graduation from Bradford University with an honours degree in Civil and Structural Engineering. He spoke of being appalled by the dubious business ethics he encountered in the industry early in his career. Notably, his first business venture did not succeed, but he learnt a crucial lesson from this experience, leading him to a strong focus on resilience. Subsequently, Dave contributed to major projects in London, including sections of the M25 and the original Waterloo International Terminal for Eurostar, alongside various bridge constructions. Throughout this period, Dave harboured a strong ambition to establish his own civil engineering firm. His vision was to introduce non-confrontational and collaborative working methods to the construction industry, aiming to reduce the prevailing atmosphere of agitation and its associated “claims culture.” This founding vision and relentless drive have been instrumental in developing the Meldrum Group into its current form. Dave Meldrum also spoke of the pride that the three original employees are still with the business. He has progressively built a business that is both fiscally and socially responsible, underpinning its success.
A substantial portion of the group’s work now stems from client referrals and repeat business – a testament to Dave’s steadfast commitment to delivering quality results, on time and within budget, while simultaneously cultivating a strong team culture and an environment where individuals are empowered to maximise their potential. Meldrum Group takes pride in directly employing all its tradespeople and professionals. This dedicated team of over 200 individuals provides the in-house capability and capacity to manage projects of any size and complexity, ensuring consistent delivery of high-quality projects, on budget and on programme. Under his leadership, the business has expanded significantly, now encompassing six distinct delivery arms: Fabrication, Civil Engineering, Construction, Building Services, Fire Engineering, and Facilities Management. The group also includes its own Plant & Transport company and a charitable arm, the Meldrum Foundation. With a current team of around 220 dedicated individuals, the company aims to achieve a £70 million turnover by 2025, solidifying its position as the preferred construction partner for its clients. Dave’s personal narrative, building this business from inception and then transitioning it to an Employee-Owned Trust by October 2024, exemplifies a distinctive approach to fostering a sustainable, people-centric enterprise. Through its diverse portfolio of companies, Meldrum Group provides fully integrated services, from initial planning and design to civil engineering and construction. Their Facilities Management company further offers planned and reactive maintenance support, providing clients with comprehensive peace of mind throughout the lifecycle of their assets and buildings. At Meldrum, the Core Values are not merely abstract principles; they deeply define the company’s identity and shape its culture. New team members are inducted using the Meldrum Starts With Me ethos, which clearly outlines the expected behaviours, traits, and attitudes.
The philosophy underpinning Meldrum Starts With Me is straightforward: every aspect of their work originates with the individual. The business and its culture are built upon the exceptional people within the organization, recognising the vital role each individual plays in collective success. Meldrum Starts With Me rigorously sets standards, detailing what employees should Be, Know, and Do, and delineates the ‘performance principles’ for each core value. Expectations are explicit, and high standards are consistently maintained. This framework extends to leaders and managers, who are expected to embody these Core Values and lead by example. The company actively recruits like-minded individuals who align with these values, ensuring that as Meldrum continues its growth and evolution, its distinctive culture remains intact and is never diluted. This commitment helps sustain Meldrum as an exceptional place to work. During the seminar’s Q&A session, Dave Meldrum further elaborated on the company’s dedication to these values, highlighting their effective use of psychometric testing in recruitment, which he characterised as “scarily accurate” in identifying individuals who genuinely align with Meldrum’s core ethos. Key Values Include:
Integrity: Defined by honesty, consistent moral and ethical standards, and mutually beneficial colleague relationships that foster positive behavior and culture. It emphasises respect and trust in each other’s ability to perform well, accountability for individual actions, and contribution to a successful team.
Pride & Passion: Prioritising the value of each individual’s positive contribution to the Organization and demonstrating a strong commitment to doing so.
Quality: Delivering a service level consistent with their Quality, Environment Management Safety System (QEMS) and Best Practice.
Innovation: Fostering new working methods that drive efficient behaviors and continuous improvement.
When Dave Meldrum established The Meldrum Group in 2001, the core principle was a collaborative approach, fostering close partnerships with clients to ensure complete satisfaction. The company holds a deep passion for its work, and its people are regarded as absolutely fundamental to its success.
The Meldrum Group’s history reflects consistent growth and an unwavering commitment to its people:
2001: Dave Meldrum founded the company.
2005: The company introduced 10% employee-owned shares, laying the groundwork for broader employee ownership.
2009: Their first graduate was recruited, and turnover surpassed £200,000.
2010: The Meldrum NBS Department was formed.
2012: They proudly achieved their first Investors in People accreditation.
2013: They were awarded the Investors in People Bronze award. This commitment to their people continued, with the company achieving Investors in People Gold again this year, reflecting Dave Meldrum’s deep-seated business ethics. Meldrum Civil Engineering was also established.
2014: The company was honoured as the Best Building Company of the Year.
2017: A significant 4-year contract with Newcastle College was secured.
2018: The Fabrication and Civils & FM divisions were launched, securing new work, and Meldrum Facilities also achieved substantial success.
2019: They achieved their best financial performance to date.
2020: The group underwent a rebrand and proudly launched the Meldrum Foundation, its charitable arm.
2021: They celebrated 20 years of Meldrum.
2024: This was a momentous year as the company officially became a full Employee-Owned Trust (EOT), a truly pivotal step in its succession planning.
During his seminar, Dave Meldrum delved into the various succession planning options available to business owners, weighing their advantages and disadvantages:
1. Selling the Business (Trade Sale):
Pros: Can yield the highest financial return for the owner, offering a clean break and a clear exit strategy. It can also bring new capital and expertise to the business.
Cons: Often leads to significant disruption, potential job losses, and a loss of company culture and values as the new owners impose their vision. There’s also no guarantee that the local identity or existing management will be retained.
2. Management Buy-Out (MBO):
Pros: Allows existing management to take ownership, preserving company culture, jobs, and local presence. It can be motivating for the management team and provides continuity.
Cons: Often requires significant financing, which can be challenging to secure. It might also place a heavy debt burden on the new management team, and the selling owner may not achieve the highest possible valuation.
3. Employee-Owned Trust (EOT):
Pros: Preserves company culture, values, and jobs, as ownership transitions to a trust that benefits all employees. It fosters greater employee engagement, productivity, and retention, and offers significant tax advantages for the selling owner (0% Capital Gains Tax on sale proceeds). It supports a legacy of responsible business.
Cons: The valuation might be lower than a full trade sale, and the process can be complex, requiring careful legal and financial structuring. It also involves a shift in governance and decision-making, requiring effective employee representation.
The Meldrum Group has since grown significantly, now targeting a turnover of approximately £70 million. A pivotal and noteworthy moment in the company’s history was its transition to an Employee-Owned Trust (EOT) in 2024. An Employee Owned Trust (EOT) signifies that a trust now holds a controlling interest in the company, operating for the benefit of all employees. This model, actively encouraged by the UK government, provided an excellent avenue to transition ownership to employees as part of the succession plan, offering notable advantages.
The specific structure chosen by Dave Meldrum for the Meldrum Group’s EOT was a hybrid model, with employee interest at 80%, management holding 15%, and Dave Meldrum retaining a 5% stake. This careful allocation of ownership was designed to ensure stability, maintain agility, and preserve the continuity of the founder’s core ethics within the business. Through this structure, every individual at Meldrum possesses a genuine stake in the business’s success. This approach ensures that the workforce remains at the very heart of the company’s operations, fostering a rewarding, solutions-driven, and innovative collaborative environment that consistently delivers optimal results for clients. During his seminar, Dave Meldrum provided an in-depth exploration of the strategic rationale behind this move, detailing the tangible benefits observed, the challenges encountered, and the successful implementation of this significant change. The session offered valuable insights for anyone interested in business growth and succession planning that prioritises its workforce.
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