Strategy & Operations » Leadership & Management » Quilter CFO on creating value through deal-making

When the opportunity came for Mark Satchel to become CFO of Quilter, the £3bn wealth management firm that emerged from the break-up of financial services giant Old Mutual, he was well prepared for the role.

After all, he had been with Old Mutual  for almost 20 years and possessed a strong understanding of the South African group- how it had changed tack in order to maximise shareholder value, taking the lead on a number of its acquisitions and disposals.

But Satchel had also honed finance leader skills through playing understudy to former Lloyds Banking Group CFO Tim Tookey, who was parachuted into Quilter when it was pared off and listed in 2017.

Satchel says of Tookey, who had guided Lloyds through some of its darkest days of the financial crisis, then running finance at Quilter before retiring last year for him to step up: He “provided a hell of a lot of insights day to day, in how a CFO could operate. In many ways we were lucky and privileged in that someone of Tim’s calibre would get involved in a business of our size.”

“Tim’s forward planning was a different league from what I’d seen anyone else do before. He was always thing 3, 6, 12, 18 months ahead, in the medium to long term rather than the next board meeting or the next quarterly update,” says the South African.

In many respects forward thinking is a key part of Satchel’s role, especially around the capture of insights from data for the preparation of management information. “The trends that one can see can play a vital role in informing strategy, making sense of different projections for the whole planning process.

“Finance is the bit that brings it all together, and then in some ways becomes the guardian of the actual performance, tracking what we set out in the plan and the predicting of what might happen, and the financial consequences of it,” he says.

“I see finance’s role as being the conscience of the business, to say what are the things that have gone well and why and the things that are not going well and what are we doing about them. When we look at the hard reality of the things that aren’t going well, things that need some form of intervention in order to get them back on track,” he says.

Quilter is enjoying a period of strong performance. Its two main segments- Advice & Weath Management and Wealth Platforms- combining several brands manage a total £118.7bn of investments for 900,000 customers (as at 30 September 2019). In its last full year results the group delivered adjusted profit before tax of £233m, up 11% on the previous year, on revenue of £788m.

South African origins

Satchel says he owes his resilient nature to early education in a boarding school in Port Elizabeth, which he left to study for the Bachelor of Commerce at University of Cape Town (UCT), at the time a hotbed of anti-apartheid unrest when he arrived in 1988. “I wasn’t actively involved with the student demonstrations, but you got involved with them just by virtue of being at UCT. We had police on the campus and army moving in, you had rubber bullets fired at you, so it was an interesting time in South Africa’s history,” he reveals.

Having undertaken work for the branch of BDO Spencer Steward in his home town in holidays, Satchel undertook chartered accountancy articles at KPMG in Cape Town, but then yearned to work in the US, but realised being a South African might count against him. A perception that South Africa’s education and training might be perceived in America as inferior to other candidates globally, led to Satchel heading to Canada instead.

Satchel joined KPMG’s office in Vancouver. “I’d been to Zimbabwe and Botswana, but I’d never travelled north of the Zambezi,” he says. In the two years in Vancouver, Satchel says he became much more adaptable, having to establish himself quickly in the pre-social media age.

Satchel says his time in Canada as a chance for personal development, given the many culturaI issues he encountered there. He recalls a conversation with an audit partner about stock, which in South Africa meant inventory, when the Canadian was talking about shares.

A move to London, saw Satchel gravitate to the burgeoning financial services sector in the City. A short stint at Deutsche Bank- which was at the time undertaking a major IT migration, was followed by a couple of years at Swiss bank UBS working on a euro conversion programme.

But then a former partner at KPMG’s Cape Town office, who had moved to old Mutual, a vast South African insurance and banking group that had just been listed in London- asked him to join the new FTSE 100 group. He knew Old Mutual well, as it was the accountancy firm’s biggest audit client in Cape Town.

On arrival at the start of the new millennium, Satchel found himself producing a maiden set of accounts in a finance team of seven, “none of whom had ever done this before,” he says. “Yet it was probably the biggest FTSE100 company no one had ever heard of in the UK at the time,” he adds.

He says that in a very small finance team “you go where the work is, so it might be statutory reporting, business planning, MI, M&A,” he adds. He also learnt strong relationship skills liaising between the UK and South African centres of the business. “You needed to package up the question, the ask, in the right manner to make the most sense, to get the information that was most relevant to what you needed,” he explains.

Satchel says there was cultural differences, partly because the previously mutual Old Mutual had a different approach to reporting. “It used to prepare for 30 June year-end so it had to change to December, but also reported results several months after the period end, and I suddenly had to do it in a month,” he reveals. “It was about change in some of those dynamics, dimensions and ways of working,” he stresses.

Career take-off

In time, Satchel’s development of soft skills became increasingly important as his career advanced in the growing Old Mutual group, which ultimately expanded to become a £10bn market cap business. He became CFO of the group’s UK business portfolio, but was soon involved in selling wealth management arm Gerrard to Barclays- the start of a series of transactions he would take responsibility for.

Assigned to Stockholm for 15 months to integrate Swedish savings and investment group Skandia, acquired in 2006, he was named CFO of Europe and the Latin American (ELAM) businesses of Skandia- a mixed bag of start-ups and 50-year-old entities. “The biggest learning was of the significance of cultural differences, different regulatory and governance set-ups, and diverse approaches and personalities,” says Satchel, who sat on the board of several businesses in the Skandia brand.

Building strong relationships with heads and CFOs of each country meant that when it came to selling the businesses, Satchel had an advantage from an economic and emotional perspective. “Transactions are emotional, for the people that are being bought or sold, so having a good understanding is vital. That also applies to the counterparties you might be dealing with,” he says.

In the continuing push to create value, the ELAM business was split up, some of which became part of the UK business, which Satchel joined to work on strategy with UK CEO Bob Head, “almost as an internal consultant, to cobble everything together,” he says.

As a new model emerged, with Quilter becoming the standalone wealth management provider following the break-up of Old Mutual, Satchel became under Tookey deputy CFO and corporate finance director. His record of nine disposals and three acquisitions, as well as bond raising and listings, turned Satchel into an expert deal maker.

Of M&A work he says: “It’s great to be involved in, although very hard work. It’s a bit like riding a bicycle in the rain, at the time you don’t enjoy all of it, yet afterwards you realise it was a good experience.”

“The difference between an acquisition and a disposal is an acquisition you’ve got to live with, so in many ways its harder. Acquiring a business is just the beginning, you’ve then got to work the integration, but seeing that come together can be very rewarding down the line,” he says referring to the example of adviser network Intrinsic that was bought by the group in 2014.

Satchel says undertaking numerous major transactions has helped him as a group CFO in appreciating how a corporate can best operate. “Understanding how it all works and fits together, I think is vital, particularly from an acquisition perspective, in terms of ensuring it delivers what it is supposed to deliver down the line,” he says.

It has also helped in forging strong relationships with external parties at an early stage. “Even before we listed Quilter on its own I knew our shareholders in South Africa, which are still a large part of our shareholder register, and my engagement with bankers and other advisers had been taking place for a long period of time,” he reveals.

“I’d had a lot of interaction with advisers, through M&A but also normal corporate activity, so that part of it was relatively straightforward, which often for a new public company CFO are the parts they haven’t had a lot of exposure to. The media side has been a new development, but Tim was brilliant helping me in this respect,” says Satchel.

At the start of 2020, Quilter’s share price has seen a welcome boost from the Brexit process gaining some momentum. Satchel says: “We’ve got a long way to go with Brexit and what it all means for the British economy, but for our business having some form of resolution on Brexit, is certainly better than where we were two or three months ago. But we’ve quite a way to go before we are out of the uncertainty that Brexit is bringing,” he adds.

 


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