Jonathan Sands on Elmwood demerger: “It’s never been just my business”

The founder and lead shareholder of Elmwood reveals why now was the time to split up the consultancy, and what direction he and colleagues are going in now.

More than 40 years after its founding in Leeds, earlier this month design consultancy Elmwood announced it would be “demerging” its business.

The move will mean that for the first time since 1977, the Elmwood name will no longer be associated with its home city. Instead, global business operations will be shifted to London and will continue there and in the consultancy’s studios in Singapore and New York.

The Leeds and Melbourne branches of the business will now have the chance to operate independently of the Elmwood name – giving the “next generation of Elmwood leaders the chance to run the show”, according to consultancy founder and lead shareholder Jonathan Sands.

“I didn’t want to go past my sell-by date”

The succession plan, as Sands refers to it, has been in the pipeline for the last few years and has involved installing “strong leadership” across all studios before this point.

Sands explains there are “three truths” surrounding why now was the right time to demerge Elmwood. The first is that he is about to celebrate a milestone birthday.

“One of my biggest concerns was that I didn’t want to go past my sell-by date and have to make a decision for Elmwood in a knee-jerk way,” he says.

The second is that the right set of circumstances to act any other way had not presented themselves to the business. After weighing up options, demerging and handing the business down to its management teams was the “best route forward”, Sands says.

The third is meeting the needs of the rapidly changing design world in which Elmwood operates. Sands says that while offices in North America, Europe and Asia – served by Elmwood studios in New York, London and Singapore respectively – are crucial, having branches in Leeds and Melbourne are not for a global business.

He adds that the Leeds and Melbourne offices continue to be so successful owing to the unique and specific skillsets they offer clients and that it is this which marks them out from the wider Elmwood offering. Sands says it made sense to demerge them, so they could be focused on as individuals.

The original coverage of the 1989 Elmwood buyout, as broken by Design Week

“I remortgaged my house in 1989 and borrowed £500,000 to buy this business”

As for why he didn’t consider simply selling off Elmwood, Sands says the correct set of circumstances has simply never arrived. In the past 10 years, he recalls “around 20 or 30 times” being approached by suitors looking to acquire the consultancy.

For Sands to have considered the offer, he says he needed three boxes ticked – a take over needed to be good for him, his colleagues and the new owners.

“I remortgaged my house in 1989 and borrowed £500,000 to buy this business that on paper was worth about £900,” he says. “I leveraged myself a lot at the age of 28, and that was scary, so any deal needed to be good for me.”

When it comes to his colleagues, some of whom Sands says he has worked with for upwards of 30 years, he says he owed it to them to secure a good future. He says: “They essentially gave me their careers, after all.”

For a similar reason, Sands says any deal needed to be good for the new owners, because otherwise everyone involved in Elmwood would be miserable. Since all the propositions for selling the consultancy were unable to tick all the boxes, Sands says he wasn’t interested in pursuing this route.

“We got a bit of a trial run with the pandemic”

It’s been an “eyewatering and emotional” journey throughout, Sands says. As with any major business change, it has been expensive, particularly in terms of legal fees. Furthermore it has meant significant changes for the Elmwood workforce.

“Moving the main office operations from Leeds to London meant we had to offer a lot of people the choice of relocation or redundancy and many made the decision to stay in the North,” he says, adding that thankfully everyone involved has since gone on to a good post-Elmwood career.

The fact that 2020 was actually a record-breaking year HOW for Elmwood further legitimised what the team were doing, Sands says. Add to this the fact the pandemic had stopped Sands and his colleagues travelling to Elmwood’s international offices, and the decision felt “very right”.

“We got a bit of a trial run with the pandemic, in that I couldn’t be there to oversee how the other studios were doing and so had to put all my faith in each one’s management to excel and of course they did,” he says. “It’s time to bring forward the next generation of leaders for real now.”

The Born Ugly team’s reaction to its new branding being revealed

“I don’t recall ever being as happy and emotional”

Additionally, the team didn’t take lightly the decision to move the Elmwood name out of Leeds, where it was born.

The final decision came down to the fact the Elmwood name was so recognised in its international studios, and that this could be the start of something new for Leeds. The studio will now move forward as Born Ugly.

“I’ve been a part of so many business decisions and deals and so forth throughout the years, but I don’t recall ever being as happy and emotional as when we finally revealed the Born Ugly branding and position to our team,” Sands recalls.

“Everyone had put something into the final result, so it really felt symbolic and like something we’d all been a part of – rather than a decision I’d made on behalf of everyone.”

“Passing of the baton”

There is no plan for Sands to disappear entirely from the show. He thinks of the succession plan more as a “passing of the baton” to studios that have largely been operating independently for some time, rather than a goodbye.

Since it was Design Week that covered the initial “passing of the Elmwood baton” to him in 1989, he says it feels like a full-circle moment to be talking about the next step.

In the short term, he says he will continue to work with both the demerged consultancies and Elmwood Global. In the mid-to-long term, he says the plan is to focus more closely on Born Ugly.

“I’m very excited to see where we’re heading,” he says.

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