Surviving buyouts a problem for FDs

Finance directors are finding it increasingly difficult to cope with major business change, according to speakers at the 1996 conference of the English ICA’s board of chartered accountants in business (BCAB).

Sir Lewis Robertson, a company doctor whose 25-year career has included successes such as industrial combine Grampian Holdings and the Stakis hotels group, warned that the FDs seldom survived a business rescue.

He claimed that of the seven companies he had been involved with, he had kept the finance director on board in only four. ‘But one of these probably should not have been kept on,’ he said.

‘The FD may say that he tried to tell the board about the company’s plight, but that they were deaf to him,’ Robertson continued, adding that, although FDs must carry their share of corporate responsibility, ‘you have to give them a chance’.

Robert Smith, head of the venture capital arm of Deutsche Morgan Grenfell and president of the Scots ICA, said that MBOs frequently led to the finance director’s departure. This, he said, was because venture capitalists often insist on the appointment of a more suitably qualified individual before providing funding.

Smith added that the FDs in subsidiaries of overseas companies often just filled in forms for head office, but had probably never spoken to bankers or financiers. He warned: ‘You may think that never speaking to a banker is no bad thing, but when you have to talk to 20, previous experience of dealing with them is necessary.’

ICI chief executive Charles Miller Smith, a former FD at Unilever, predicted a reduction in the number of FDs who are pure accountants. He said: ‘More will be appointed who have a wider range of skills. The world is not about specialisation.’

Miller Smith was scathing about the accountancy institutes which, he said, had developed training that required accountants to specialise too early in their career.

Miller Smith added that only the brightest, most business-focused FDs would survive the changes taking place in the finance function. ‘There will be many casualties,’ he warned.