Tough market means directors who left Schal to start their own company are on verge of being bought.

Interior Services Group boss David King is set to take control of subsidiary company Exterior by buying out the five directors who started the company with him less than three years ago.

It is understood that King, who owns 51% of the construction manager, is talking to the five about buying their 49% stake.

Insiders say King is understood to be willing to sell the company once he acquires it, although others have said that he would absorb Exterior into Interior, the highly successful fit-out arm of ISG.

One insider said: “There is some disappointment within the group at Exterior’s success rate in winning work. King has some big plans afoot and is keen to restructure things. He’ll either pull it completely in-house or get rid of it.”

The move marks the end of a dream for the five directors, who rocked the industry by resigning their jobs at Schal and going it alone. At the time, industry sources said their move was the most significant in the construction industry since a group of senior managers left Bovis to form Mace in 1990.

The five subsequently formed Exterior with King, who saw the company as a natural complement to Interior.

The fate of the gang of five is unclear. It is understood that one of them, Steve Trotter, will join the main board of ISG, but the future of the others could now be outside the company.

It is understood that Ian Blake has announced his intention to quit the company and has agreed a price for his stake with King. It is felt that fellow founders Mark Rushworth and John Ness may follow suit.

All three could be snapped up by rival construction managers.

The future of the other founder member, Matthew Giles, is also unclear, but insiders said he may remain with the company as an employee.

One insider said: “He is very good at selling the company in presentations to clients. He would still be an asset.”

Industry sources said that Exterior had bid work at cost during its first year. In its second year, it was forced to raise its price to the market rate, and has failed to make an impact in what is becoming an increasingly competitive market.

King said at the group’s last interim results in March that after breaking even in its first year, Exterior was now trading profitably.

King and the other five directors of Exterior were unavailable for comment.

ISG reported an operating profit of £2.12m for the six months to 31 December 1999, up from £1.41m a year earlier.