Who's the boss? The ousted car sales tycoon versus his private equity investor
In many ways, Peter Waddell is lucky to be alive, let alone a multimillionaire. His backstory involves him wandering the streets of Glasgow after parental abuse left him in a children's home during the 1970s.
And yet Waddell went on to build a used car empire called Big Motoring World, accumulating an estimated £500m fortune, a historic home on the outskirts of London and a string of performance cars.
But now the 59-year-old faces another challenging chapter, which is threatening chunks of his fortune. The used car salesman has brought an employment tribunal claim as well as a high court case against private equity investors in his company after he was ousted from Big last year.
His exit, in April 2024, was triggered after an investigation found he had made sexist, racist and abusive comments towards colleagues – allegations that he contests.
However, Waddell goes further than simply denying the claims, raising questions about how private equity firms interact with founders once the financiers have invested in their companies.
His court filings allege he was prevented from responding to the accusations, and that they were used by his 'capricious' investors who 'prejudged and in fact determined the outcome of [an] independent investigation as a means of securing Peter Waddell's exclusion from Big'.
Now it looks likely that a court will have to assess whether Waddell's alleged behaviour demanded he be sidelined from the business he created. A surprising second question will also be in play: does Waddell's ousting make him a victim?
When entrepreneurs give interviews about their big career break, they often tell tales about dropping out of university to launch a startup or hustling for jobs they were barely qualified for. Waddell's tale is very different.
The businessman, who is autistic, has dyslexia and is partially deaf, for which he now wears two hearing aids, has a story that involves being physically abused by his mother.
'She scarred my whole body, attempted to cut my hands off and smashed my head,' he said in a recent interview. From toddler age onwards he spent most of his childhood in a children's home. From there he graduated to living on the streets, describing himself as a 'tramp'.
Homeless and desperate for warmth during one particularly biting winter day, Waddell wound up at Glasgow's Buchanan bus station where he shielded himself from the cold behind a pile of suitcases in the boot of a parked coach. The door was slammed behind him and the teenager finally emerged in London.
In the capital he recalls landing a job at a minicab office and eventually ploughing his earnings into buying cars at auction, which he lined up in parking spaces along the road near a flat he had managed to rent. This was the genesis of Big Motoring World, which grew to a company with 525 employees, revenues of £371m and profits of £6.6m, according to the company's 2021 annual accounts.
Those figures attracted investors and in April 2022 Freshstream, a private equity group, acquired about a third of the business, with the option of eventually buying out Waddell's remaining shares. The businessman planned to retire to Spain and enjoy his string of homes, luxury cars and helicopter.
But it didn't work out like that. Within two years the used car market had stalled and the two parties were at war.
With the business beginning to struggle, Freshstream started to doubt whether it wanted Waddell running Big and so began to explore potential avenues.
Freshstream's contract gave it 'step in rights', where it could take action against Waddell if the business underperformed. It also possessed a nuclear option: removing Waddell from his company if he had committed a grave offence that might affect Big's value – a 'material default event', in the jargon.
At the start of last year, Freshstream and the company's management opened an investigation into accusations concerning how the founder spoke to staff, customers and business partners. The allegations that emerged were shocking.
The claims, some of which were historical and were not formally dealt with by the company at the time, included 'extremely serious racist abuse and sexual harassment of female employees', according to defence filings submitted to the high court by a Freshstream holding company.
'Serious instances of racism including allegedly referring to Hindu people as [the car marque] 'Hyundais',' the Freshstream papers add. 'Serious allegations of sexual harassment including allegedly … telling a female cleaner: 'I bet you'd like to suck my dick?''
The papers also allege that Waddell called 'senior members of the management team the 'C word'' and suggested 'he would 'give it to them up the arse''.
In total, Freshstream investigated 27 allegations, some of which Waddell denies and some of which he claims were taken out of context. 'The allegations are fake,' Waddell told the Guardian. 'We will prove it in the court case.'
Waddell's high court filings deal mostly with process, with the tycoon stating that he was not allowed to defend himself during the group's internal investigation, which he alleges was set up to oust him.
Waddell's claim says it is difficult for him to 'easily read and digest information'. He had been signed off work by a doctor for four weeks with a heart condition on 28 March 2024, the court papers say, and was invited five days later – on 2 April – to an 'investigation interview' that would take place on 9 April.
At the interview, 764 pages of evidence were to be considered. Waddell's lawyers requested more time but the company pressed on without him, on the basis that there would be an 'intolerable risk' to the business in delaying.
The investigation's final report, which was written by the employment lawyer Nicholas Siddall KC, runs to 138 pages. In it, Siddall suggests he was instructed to come to a conclusion in the absence of any response by the accused; he also seems to raise questions about why the company had concluded there would be an 'intolerable risk' in granting Waddell extra time in which to respond.
'Plainly I had hoped to interview PW [Peter Waddell] in order to receive his version of events,' the KC's report states. 'However, my instructions … were clear. I was not informed of the intolerable risk which [Big Motoring World] would face, and in any event I do not consider it is a matter for me to interrogate the reasons of those who instruct me.'
Siddall found, having interviewed 22 sources, that a 'material default event' had occurred in 15 out of the 27 allegations. Waddell was out.
All of which means this row – along with a separate claim about how Waddell came to invest some of his fortune in a Freshstream fund – looks likely to be fought out in the high court, probably next year.
But whichever way the judge leans, other entrepreneurs have made comparable allegations.
The Guardian has spoken to four other British founders of startup businesses who wished to remain anonymous but make similar claims that various investors had attempted to oust them from their companies.
None of these allegations were ever tested in court. In Waddell's case, that seems about to change.
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