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TMF Group’s CFO on knitting the business together

SOMETIMES it’s a struggle to ensure your company is more than the sum of its parts. For TMF Group, that challenge has been particularly acute as we acquired more than 60 businesses around the world between 2005 and 2008.

TMF Group embarked on a land grab, buying up businesses to build our international footprint, and when that acquisition spell ended, we had to build a common culture. We had to work out how to absorb and administer our new territories even as we acquired new ones. It was vital we got this right. Our success depends on giving clients the same experience, no matter where they operate and who at TMF Group they deal with.

TMF Group helps companies expand overseas by allowing them to outsource critical back-office functions. We provide expertise on everything from tax regulations in Jakarta or payrolls in São Paulo, to trade licenses in Guangzhou. We do this so our clients don’t have to, leaving them to concentrate on what they do best.

In 2008, we were acquired by private equity firm Doughty Hanson and three years later it merged us with another portfolio company, Equity Trust. It was only then that we were able to pause for breath and begin turning our huge global footprint into a competitive advantage. We embarked on our “One TMF Group” project, introducing common systems and processes and adopting a multi-jurisdictional approach to sales.

Local self-starters founded many of the businesses we bought and their entrepreneurial spirit endures. If there is a choice between going to a client meeting and hitting an internal filing deadline, the client meeting will win out every time. So creating some basic corporate discipline has been vital. To deliver services to our clients we need to have the right people in place and we can only do that by planning and forecasting.

We have also worked hard on making the business more productive and efficient. We used to have a decentralised and disparate IT operation because local MDs had the autonomy to buy whatever products they deemed appropriate. At one point we had more than 4,000 different applications. We are now carrying out a rationalisation of our IT estate, settling on one set of business-critical applications.

We have also re-focused our strategy on the internal finance systems that we use and have moved to a small number of core systems that are best of breed. In addition, I have created new reporting lines, with five regional FDs reporting to me rather than the regional CEOs.

When I arrived, the group finance function was disconnected from the business and we didn’t engage with country managers. I’ve tried to change what we do so we are seen as a business resource rather than the department that oversees a statutory reporting function. We have upped our focus on cash management across the group and reduced our working capital requirement – all of which drives shareholder value.

In late 2012, we revised our financing strategy by replacing our term bank facilities with a high-yield bond. This has given us more control over what we do with our cash as well as removing short-term targets that could restrict strategic choices we wanted to make for the business. On top of this, we are working to create a smarter set of performance management reports that tie our overall corporate objectives down into operational metrics that can be driven by local teams.

After a hiatus of a few years, the empire is expanding once more. TMF Group is starting to acquire companies again to enter new markets or bolster our offer in the countries where we already have a presence. When I look back at all we’ve done over the last few years, I realise just how far we’ve come. We now look and behave like a large global company, but we have achieved that by focusing tirelessly on knitting together disparate parts of the business. After all, you can never afford to stop focusing on the details. ?

Gordon Stuart is chief financial officer at TMF Group

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