The late Stan Perron, who passed away last Friday after building a $4 billion self-made fortune, started preparing for his succession more than 25 years ago.
The late Stan Perron, who passed away last Friday after building a $4 billion fortune, started preparing for his succession more than 25 years ago.
Succession planning is a fraught issue in many family businesses but the Perron Group is clearly an exception, having already created a structure that will allow it to continue operating smoothly.
Group founder Stan Perron, who died on November 23, started preparations for this eventuality many years ago.
It was back in 1989 that long-serving executive Ian Armstrong was appointed a director of Perron Group.
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Two years later, lawyer Laurence Iffla and accountant Ross Ledger were appointed non-executive directors, and they still serve on the board.
The group currently has eight directors, most of them long serving, and of a calibre that would be the envy of many ASX-listed companies.
They include Mr Perron’s daughter, Elizabeth Perron, who has been a director for more than 20 years.
The spotlight will inevitably shine on Ms Perron as a likely successor to her father, who is survived by his wife, Jean, three children (Elizabeth, Roy and Paul) and seven grandchildren.
But the bigger story for the group is the structure it has put in place.
Mr Perron spoke about this process in 2004, when former Wesfarmers chief executive Trevor Eastwood was appointed a director.
“I’m getting older, I’m 81,” Mr Perron told Business News at the time.
“There is going to come a day when I won’t be here, so we’ve brought in Trevor [Eastwood] as a commercial person.”
Mr Armstrong explained that the appointment of the former Wesfarmers boss was a stepping-stone toward operating more like a public company.
“With the advent of Trevor on the board, we are now involving the board to a much greater extent,” Mr Armstrong said.
“We’re just starting that process now and that’s why we brought on Trevor to assist us in formalising our relationship with the board.”
The Perron Group board oversees a lucrative business, albeit one with very few staff; its focus is on having a small number of high-quality assets that it holds for the long term.
The group has net assets (after adjusting for debt) of more than $4 billion.
It has one of the largest privately-held property portfolios in Australia, including sole or shared ownership of 12 major shopping centres, two office towers and significant interests in land development.
Key property assets include 50 per cent of the Central Park office tower and half the Galleria Shopping Centre.
Through Toyota WA, the group has sole distribution rights for Toyota passenger and commercial vehicles in Western Australia.
It also has extensive investments in equities, infrastructure and mining royalties.
The annual returns lodged by Perron Investments with the Australian Securities and Investments Commission highlight the group’s profits.
It recorded revenue of $579 million for the year to June 2018 and posted a net profit of $299 million for the same period.
The annual accounts also disclosed the group owned investment properties worth $3.7 billion and held unlisted investments worth $1.1 billion.
Mr Perron retained a keen interest in the business until very recently, attending the office almost every working day.
The quietly-spoken Mr Perron was also considered one of WA’s most generous philanthropists.
In 1978, he established the Stan Perron Charitable Foundation, which has donated tens of millions of dollars to more than 150 charities in WA.
Ms Perron (who was formerly known as Elizabeth Perron De Marte) recently took up the day-to-day management of the foundation.
The start
Mr Perron was born in Perth in 1922 but spent most of his childhood and teenage years in the Goldfields, living with his family in great hardship.
He started work at the age of 14 and achieved considerable success in the 1950s with earthmoving business Perron Brothers.
Mining legend Ron Manners, who also grew up in Kalgoorlie, spoke of Mr Perron’s business acumen in his book Never A Dull Moment.
In 1958, Mr Perron purchased the largest and most powerful ‘scraper’ in the world at the time.
“Contrary to the beliefs of others in WA that it could not be employed successfully, his foresight paid immense dividends,” Mr Manners wrote.
Mr Perron’s business extended to Perth, where it completed the earthworks for the 1962 Empire Games stadium at Perry Lakes.
He subsequently sold the earthmoving business to Thiess, which among other things held the rights to distribute Toyota vehicles in WA.
Mr Perron remained as a manager and was given the task of finding a buyer.
“They said: ‘Before you leave us, you need to appoint a Toyota distributor’. But nobody was interested,” Mr Perron previously told Business News.
“Les Thiess said to me: ‘You better keep it yourself, you might get a dollar out of it one day’.”
That was in 1964, when Toyota was a little-known brand.
Toyota subsequently grew to be the number one automotive brand in Australia, and Mr Perron took a clip on every sale.
Remarkably, his agreement with Toyota was based solely on a handshake for many years.
“Until about three years ago it was only a handshake,” Mr Perron said in 2004.
“It was formalised only because I was getting older.”
Mr Perron’s ability to lock-in a formal long-term agreement with Toyota spoke volumes about his relationship with the Japanese motoring giant.
“They have been very loyal and I’ve been good to Toyota over the years,” Mr Perron said.
“I helped them get established in Australia and they’ve rewarded me by giving me the franchise.”
Mr Perron didn’t forget his early days with Toyota.
In the lobby of his East Perth office was a lovingly restored 1964 model Toyota 700 sedan – the first model he sold.
In his office Mr Perron kept the original handwritten books recording the number of cars he sold in the early days – just 25 in 1964 and 53 in 1965.
Mr Perron invested in a number of ill-fated mining ventures with the late Lang Hancock but one investment has paid off handsomely.
In return for lending £500 to a cash-strapped Mr Hancock in 1959, Mr Perron secured a 15 per cent share of royalties from the Mt Tom Price iron ore mine.
Mr Perron could have had a 30 per cent share if he advanced £1,000, but was wary of sending good money after bad, as there was no guarantee the royalties would flow.
But they have, in abundance, and Mr Perron has been receiving millions of dollars in royalties every year since.
