Steve Dolton talks to Rachel Bridge at Drax about stockmarket flotations, relationships and swapping PE for a Plc.
The most priceless asset that any CFO can have in his career is a first class deputy, says Steve Dolton.
He says: “You can’t be successful without having a great number two. As a CFO you need somebody in your organisation who is good at the technical and financial accountant role so that you can focus on the general business issues, strategies and dynamics. Most people who fail as a CFO do so not because they haven’t got the skill set, but because they have not invested in having a good team around them. That is absolutely critical.”
This is particularly true when you are going through an IPO, he says. As CFO, Steve led the successful flotation of the National Accident Helpline business, NAHL Plc, on AIM in 2014.
He says: “Flotation is extremely time consuming, particularly the process involving forecasting, due diligence and verification where you literally have to verify every statement you make. I don’t think I have ever been through anything more painful. We had already done a lot of the preparation required because we were looking to sell the business but it was still three months of very hard work. Without an outstanding number two it just wouldn’t have happened.”
After studying accountancy at university Steve trained with accountancy firm Grant Thornton but on qualifying realised that he would prefer to work in industry. So he joined the finance department of Habitat and then moved to Peek, a traffic management business.
It was there that his career really took off. After two years as a project accountant in head office and then as financial director in a manufacturing business in Winchester, Steve was unexpectedly sent to Hong Kong with 24 hours’ notice to help establish the Group’s Asian operations.
It was a challenging experience, not least because he had a wife and 18 month old baby to take with him. Steve spent much his time out there travelling around the region setting up joint ventures and winning new contracts. He says: “There were some mornings I woke up and thought crikey, how am I going to deal with this today? You learn things very quickly.”
A further surprise awaited him when he returned to the UK two years later. The same CEO who had sent him to Hong Kong told him there was no longer an appropriate job for him back in the UK.
Steve says: “He said here is a cardboard box and a cheque, because we haven’t got a job that is going to continue your career development. Get out there and make something of yourself.”
He left the company in a daze but just three weeks later he got his first private equity role. It was an inspired move. He spent the next 20 years as a CFO in private equity-backed businesses, achieving four successful exits before overseeing the IPO at NAHL Plc.
Swapping PE for a Plc required a considerable shift in his CFO role, he says. “In a Plc everything is in public view, whereas in a PE environment there is a lot that you don't have to do in public, whether that is management changes or restructuring. You can get a business into shape behind the scenes.”
For him, the most important relationship in any business will always be that between the CEO and the CFO.
He says: “If the relationship between the CEO and the CFO isn’t working, the business will fail, because it is so fundamentally critical to business success. In my mind, the mark of a really good CEO is somebody who treats his CFO as a true business partner, not just as the finance guy sat in the corner.”
After 30 years in an executive role, Steve is now building up a portfolio of non-executive roles, including Chair at marketing services company Go Inspire.
Having experienced the board process from both sides, he very much welcomes the move by a growing number of Private Equity houses to supplement the Chair with more industry experts on portfolio boards rather than just filling with investor non-executives.
He says: “The good PE houses are encouraging more industry people to sit on boards. They are not frightened to have two or three such individuals on a board who can add value. The traditional model of putting one or two investor non-execs on a board can be quite frustrating because they can be very busy on other deals and cannot add value in the same way as someone who can provide an industry perspective."
"I have even seen investor non-execs who have turned up and opened the board papers on the morning of the meeting. That cannot help create shareholder value. The really good PE houses have already gone through that change in mindset; the others are still catching up.”
Drax sector lead: Mark Tomley
Head of CFO and Finance Practice
Tel: 020 3949 9557