The plug was pulled on Steve Webster’s time at FTSE-100 plumbing and heating business Wolseley this February, bringing his 15-year career there to an ignominious close.
Though seemingly abrupt, the replacement was not entirely unexpected given the arrival of a new CEO, Ian Meakins, last July. But when Webster was interviewed by Financial Director in 2006, times were buoyant for Wolseley and Webster: he thrived on a stressful lifestyle, driving finance and scores of acquisitions and getting his hands dirty with the finance team. His achievements as CFO are as illustrative of his zeal and energy as they were of the times: heady, credit-splurging and housebuilding-mad.
Both Webster and Wolseley were riding high on the acquisition trail: “We’ve doubled the size of our business every five years over the past two decades,” adding “We have the potential to do something similar over the next five or seven years.” Revealing the scale of its operations, Webster said that for every 100 businesses on the company’s acquisition radar, he would undertake due diligence on about 20. From those 20, the company would typically complete deals with 15 to 17 businesses.
He admitted the lifestyle took over his life. By the time he was interviewed he’d been involved in more than 220 acquisitions over an 11-year period. “My memories are of working through the night,” he told us, “not sleeping for 36 hours, having all the stress and the hassle of completing the deal.”
It seems obvious that so many acquisitions in such a short space of time would create an integration nightmare, too but Webster maintained that Wolseley prided itself on the ability to acquire businesses that blended in well.
Likewise, Webster and then-CEO Claude Hornsby made a good team. “It’s crucial in that the CFO and the CEO are closely aligned in terms of strategy, the communication of that strategy and the understanding of the business,” he told us. “If you’re not, you won’t be very effective as a team and it will confuse investors and the market.”
That explains why Wolseley’s new CEO Ian Meakins decided to give Webster the boot and draft in John Martin, who for a time was his CFO when the pair worked at Travelex. An old friend, a trusted business partner and one with impeccable private equity contacts: the perfect fit for the new Wolseley.
Webster flourished under Wolseley’s acquisitive approach apart from the last couple of years, when market conditions changed the rules of play. For the year to January 2008, the company shocked many by reporting group pre-tax profit had shrunk 72.5% to just £79m, streets away from its usual double-digit percentage increases. With hindsight, Wolseley was always going to suffer badly when 58% of group sales came from the US housing market which promptly tanked. But in 2006, Webster was not concerned about Wolseley’s US housing exposure. “We’ve made it very clear that we expect a slowing of the US housing market. It’s bound to occur when interest rates rise,” he told us. “But we still see the US as a good business environment.”
Perhaps Webster should have paid more attention to those market murmurings. But he was unconcerned about the prospective turbulent conditions, saying that, up until three or four years previously, anything above 1.6 million or 1.7 million housing starts a year was deemed a very buoyant market in the US. “But then the number of starts climbed to 1.8 million and then as high as two million. Now that it’s settled at 1.8 million some investors hear ringing alarm bells. But 1.8 million housing starts is still a far more vibrant environment than three or four years ago.” The situation certainly didn’t seem to worry Webster then.
Despite this, he did well to remain inpost at Wolseley and that is testament to his stellar achievements. His CEO, though, changed three times in the past five years. Meakins succeeded Claude Hornsby, who was drafted in to replace Charlie Banks on his retirement. Of his relationship with Hornsby, he said in summer 2006: “We get on very well. We share the same philosophy.”
Whether he saw Hornsby’s departure coming over the horizon at the same time as Wolseley’s fortunes faded, much like the housing slump and the credit crunch and he knew if the writing was already on the wall for him, too he did not say.
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