Basil O’Hagan And The Risks Of Going Public

Basil O’Hagan And The Risks Of Going Public


Vital Stats

  • Player: Basil O’Hagan
  • Companies: O’Hagan’s, The Brazen Head, Basil O’Hagan Marketing
  • Contact:

In 1997, O’Hagan’s was the largest Irish-themed franchised pub chain in the world. Its founder, Basil O’Hagan, was also voted Franchisor of the Year by the Franchise Association of South Africa and nominated as a finalist in the Ernst & Young and Sanlam Entrepreneur of the Year Awards.

Eighteen months later, however, O’Hagan’s crashed and burned. So what happened? How did the company go from high to low in such a short amount of time?

How was the brand built

The brand was built through a mix of unstinting passion, dedication and commitment. The people who were involved in the business really cared about it.

There was also a strong focus on building the total brand concept. A lot of attention was paid to marketing and public relations. Not only were TV, radio and press campaigns used to successfully grow the brand, but neighbourhood marketing was also used to great effect.

Related: Your Business Failure is Your Fault

The franchisees

Franchisees played an integral part in the O’Hagan’s success story. The franchisees, after all, were interacting with customers. Right from the start, we placed an emphasis on awesome customer service.

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With this in mind, we tried to give the franchisees everything they needed, including marketing and operational support.

Bad timing

O’Hagan’s went public at a rather inopportune time. Globally, stock markets crashed in 1998 and, locally, interest rates skyrocketed to around 24%. The company suddenly had a massive cash flow problem that ultimately resulted in liquidation.

Internal factors

It’s all too easy to simply blame the economy for what happened to O’Hagan’s, but there were other issues as well. Thanks to the success of the brand, I think I was too bullish. Forecasts were too high. When going public, one has to leave something on the table for investors.

I didn’t do this. I also believe that financial controls were lacking. We should have stayed focused on the pub and restaurant sector. We had the O’Hagan’s brand, and had recently acquired the Baron. We were in negotiations to acquire the Keg brand, which would have made the group extremely focused and powerful. There was too much diversification away from our core business.

More importantly, going public changed the way we did things in a fundamental way. As head of the executive team in charge, I lost touch with the basics of the business and with the franchisees. I never spent as much time in the field as I used to.

Things change when you go public. Your metrics change. Your start prioritising the share price above all else, which means you don’t run the business in the same manner that you always did. A lot of it also has to do with ego. Being at the head of a publicly-traded company can change you, which can be detrimental to the business.

Related: The #1 Reason For Failure of Businesses Over Two Years Old

Going under


Going under was a massive hit – not only on a business level, but on a personal level as well. I was declared bankrupt in 1999, which isn’t good for anyone’s ego. I lost all my money and a lot of my friends, and I received huge adverse press. One can’t blame anyone else if you are the CEO of a business, and hard as it may be, the blame ends with me.

Starting again

When something like this happens to you, you only have three options: You can simply quit and give up on everything, you can take a menial job and try to live a quiet life, or you can decide to bounce back with determination.

Irish pubs were something I knew a lot about, so it was an obvious choice when I decided to bounce back and try again, which is why I started The Brazen Head.

The same but different

The fundamental way in which O’Hagan’s was built was sound, so I reapplied a lot of the principles and strategies that had worked the first time round. As with O’Hagan’s, The Brazen Head was my passion, my life. I loved the concept of The Brazen Head. I ate, slept and lived the brand.

Related: Business Plans: A Remedy for Failure

However, I was careful not to lose control of the business again, something that happens easily when you go public. I sold the company about two years ago, and I now assist franchisors, retailers and small-to-medium sized businesses in the fields of franchising, neighbourhood marketing and customer service… And I enjoy every minute of it.

One more tip: Concentrate on what you’re good at, and don’t try to manage all the disciplines in a business. Play to your strengths, not your weaknesses, and surround yourself with good people!

GG van Rooyen
GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.

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