Alchemy in the UK

It's December 1977. Outside a shabby looking pub in Acton, west London, safety-pinned revellers are queuing for a gig. On the door are two more conventional graduates who've turned to promoting punk to make ends meet. With a bit of luck, after paying for the venue and giving a cut to the band, they should have a few quid left for their real love – nurturing a fledgling construction business.

"I think we booked Madness on support, UK Subs, Menace … I think even Sid Vicious performed there," says one half of the duo, John Morgan, struggling to cast his mind back. "I used to wear lots of jumpers to make myself look bigger … but we didn't really have the skill as rock promoters."

But if punk didn't bring Morgan and his business partner Jack Lovell fame and fortune, their day job, relatively speaking, has. They started off in October 1977 pitching for carpet-laying contracts. They had £1000 between them and worked out of an 8 x 10 ft office in Golden Square, Soho (half of it sublet to pay the rent). Now Morgan and Lovell preside over a business employing 3000 people and turning over £650m a year; and at the last annual count in January, Morgan Sindall's results showed profit had climbed for the sixth successive year, to £15.4m. Both own a 16% stake, or about £20m apiece. Although such cases of rags to riches can be found in housebuilding, they're virtually unheard of in contracting.

But then, as Morgan, now the firm's chairman, says, he's not your average contractor. "But I've done nothing else, so I must be. I take it as a compliment." Morgan is quietly spoken, and as the trace of his West Country lilt suggests, he's never strayed that far from Christchurch, Dorset, where he lives with his wife and three children. He is universally described as shy and modest – he even failed to mention during the interview that he made it into the last four in the Financial Times entrepreneur of the year award. On the other hand, he is extremely shrewd, and a keen listener. "You wouldn't catch him doing the conga at the office party, but you know he's there soaking up what everyone is saying," says one colleague.

"He's someone who invests in winning hearts and minds rather than being dictatorial," adds another.

As you might expect, although his firm has recently joined the Major Contractors Group, Morgan is very much the outsider on the construction club circuit. The fact that he shuns the traditional trappings of success, such as a chauffeur or an outsized executive office, puts him as odds with his peers.

One area where this different approach has shown itself is in the way Morgan has grown and structured the company. He has made a name as something of a bargain hunter, snapping up well-known regional brands that have fallen on hard times. Each of the new adoptees keeps its independence and is encouraged to use its initiative – within the constraints of an agreed business plan.

"We're more concerned we have the right people in the right positions, rather than what they're doing on a day-to day basis," he says. The Morgan Sindall family now extends to a dozen brands, ranging from Morgan Lovell, the original office fit-out contractor, to social housing specialist Lovell Partnerships, one of the newest members of the family, acquired in 1999. In May this year, the family suddenly got even larger and more diverse, when two firms were snapped up by Morgan in a week. First came Miller Civil Engineering, for £20m, now rechristened Morgan Est. Just a few days later, Morgan announced that Carillion's £80m-a-year contract housing business was joining the fold.

Companies within the group meet and swap ideas with their siblings, and a genuine buzz and openness permeates the firm. This modern business style is expressed at the offices of subsidiary Overbury, which doubles as Morgan Sindall's headquarters. Only a stone's throw from the original Golden Square base, the offices could belong to one of the architects and engineers that populate the streets immediately west of Tottenham Court Road. It's all chrome, blond wood and Jacobsen chairs. And at street level, there's a sheer glass wall revealing a bank of glass-walled boxes with people grouped around tables. "They're meeting rooms – nobody has an office," Morgan explains.

On the fifth floor, where the boss resides, the story is the same. In the midst of a small, modern open-plan office are two abutting desks with curiously empty in-trays. Twenty-four years after they started out, John still sits opposite Jack Lovell.

"We've never had a row," says Morgan. "One thing I'd advise anyone starting up is to choose their partner carefully. You must have complete trust, shared values but complementary skills and temperament. Jack's the more consistent, steady one, which was important for me when things got bad." In July, Lovell decided to take a step back from his roving role as client director, to become a non-executive director. "He's still a major shareholder, and very much involved in the firm," explains Morgan.

Power struggles at the top have been the downfall of many a partnership, but for this pair it has never been an issue. Morgan was chief executive until April last year, when he became executive chairman. "It wasn't difficult deciding who'd run the company; we've always spoken openly." The name Morgan Lovell became Morgan Sindall after the company completed a reverse takeover of publicly owned Sindall.

Morgan's business nous is one reason why, unlike other contractors, Morgan Sindall has escaped the City's panning of the sector, and he's not short of admirers in the Square Mile. "All in all, it's a good story. It's a sound financial business and he knows where he wants to go," says one analyst, saluting the company's move into civil engineering.

But is there a deal on the cards? Morgan is giving nothing away – save to say he's always on the lookout. Staying put is one thing he's very definite on. Morgan says he has no plans to sell out, even if there were offers on the table (which there have not been).

We had lots of dreams, lots of goals. The odds were stacked against us, but that made it all the more exciting

"Over the next 20 years," he says, "we want to do something very serious with Morgan Sindall. We want to create a company that young graduates put first on their list." And for those who doubt it, Morgan offers a gentle reminder – he is still only 45.

So how did you get started?
Jack and I met at Reading University where we studied estate management. A few weeks after leaving college in 1977 we met for lunch. We were both bored with the jobs we had – very junior surveying posts at London agents, and we didn't earn much money. We decided to start our own company. We were 21 at the time. Then, as now, I'd say we were pals, but not best friends.

What did you do?
We decided to set up a business doing up offices. Basically, we both had backgrounds in construction [John's father was a small developer, and the Lovells have been in social housing for generations]. We rented offices in Golden Square. When we moved in, we had no phone lines and had to use the public call boxes in Carnaby Street.

What about cash?
We had £1000. We spent £300 of that on stationery, to discover after it was printed that the telephone number had changed. We spent all day making calls to agents trying to get contracts. We even tried estate agency. We got income doing punk promotion and buying second-hand furniture. We'd clear a house on Friday night and sell it on Sunday. One weekend we made £750. Of course, no bank would lend us money, so we didn't have any borrowings. We used what resources we could. In those days, it was almost mandatory for girlfriends to be able to type.

And did you have grand plans?
We never put down on paper what our plans were. But we were always pretty ambitious. We had lots of dreams, lots of goals, but survival was number one. The odds were stacked against us, but the fact that it was so improbable made it all the more exciting. The drive was to earn a decent living, but have fun and create a business with some pace.

So when did it take off?
That was about 1979, when we started focusing on office interiors. We spent two years wandering about. By 1981, we were turning over about £4m a year. Then it all went wrong. We had to sell our houses to put money into the business. It was particularly difficult as my wife had just had our first child.

Did you feel like throwing in the towel?
No, it wasn't on the agenda. We were passionately determined to go on. There was no suggestion we wouldn't sell our homes.

What went wrong?
We made mistakes. We employed people who weren't talented. That was the lesson. When you're small, everyone counts – and it highlights the difference between talented and non-talented.

Any lessons?
Setting up a business in our 20s made us see how small businesses make a difference. They take risks, they're close to the action and quick on their feet. That's why we break the group down into lots of profit centres.

Who are your heroes?
I was inspired by my father. We developed half a dozen houses a year. He used to let me run his sites as a teenager.

Do you have any other businesses?
In 1984, I started a freshly squeezed orange juice company with some friends. It was the idea of a friend of mine's son. His father sent him to me to talk some sense into him, but I thought it was a good idea. We sold the business (Johnson's orange juice) in 1994 and made a few hundred thousand each.

I'm the non-executive chairman of a public quoted biotech company, Genetix, which produces robots that have been used for breaking down DNA codes. It helps me get a different perspective. I'm about to start a leadership studies course by distance learning at Exeter University.