Wolters Kluwer’s CFO Kevin Entricken spoke with former Dutch Prime Minister Jan Peter Balkenende and EY partner Arjan Groen for the EY interview series ‘Captains of Industry’. After a digital transformation aided by acquisitions and divestments, Wolters Kluwer's mission today is driving organic growth. Read some of Kevin's views on long-term value creation in these excerpts from the interview.
Track record and future goals
“We’re all about long-term thinking”, says Kevin. The last two decades at Wolters Kluwer have been all about change. “We’ve evolved over that period from a paper publisher to a company that’s now 93 percent in digital and services. COVID-19 has clearly caused a lot of distress and uncertainty around the world. Still, there are always some constants. People still need health care. They still need to pay their taxes and meet other requirements. In the meantime, the issue of sustainability is becoming increasingly important. Circumstances may have changed, but we still have many of the same long-term goals. Nancy McKinstry has been our CEO for seventeen years now; she definitely has a long-term perspective. I’ve been serving as CFO for seven years now. Circumstances may have changed, but we still have many of the same long-term goals.”
Priorities and commitment
At Wolters Kluwer, our shareholders, customers and employees are our top priority, says Kevin: “Their interests are at the top of our list.” Increasingly, though, there's a focus on society in the broader sense including a focus on climate, the environment, and diversity. “How can we achieve our objectives in a sustainable way and communicate that commitment to those stakeholders, shareholders, customers and employees?” asks Kevin.“How can we make sure our actions benefit all of society? How do we make sure our products and services help make the world a better place?”
For Kevin, strategy is all about clarity: “We need to be very clear about our vision and long-term business goals in all communications with the investment community, including our shareholders. Every investor will tell you they want an appropriate return on their investment. You need to deliver that return, or they will look for returns elsewhere. That should be an important KPI for every organization; measuring successes or failures. Acquisitions can help an organization expand, but they’re not risk-free. It’s up to us to minimize that risk and deliver the expected return through proper due diligence and integration.”
Reassessing and divesting
Taking stock and assessing your next steps is the key to successful portfolio management, says Kevin. “You need to reassess your portfolio, every single year. In some cases we come to the conclusion that a company is better off in the hands of other owners. For strategic reasons, that is. I’ll give you an example where we divested a really solid business. A few years ago, we sold ProVation Medical, a software company operating in the health-care sector. ProVation Medical helps hospitals and surgeons to document surgical procedures with smart software. We always try to identify the best possible opportunities. At the time, we felt clinical solutions would be more effective in providing better diagnoses and treatments for patients. If we find an owner that could drive more value from the asset than Wolters Kluwer, we’ll be happy to divest. We’re not afraid to take radical measures. The divestment of our educational division would be a good case in point.”
“It’s important to stay close to the business", says Kevin, also emphasizing a need to have a thorough understanding of local markets.“ That knowledge will help you make sound decisions. A good head for numbers alone doesn’t make you an effective CFO who’s the best for business. The job involves guiding and facilitating change processes. You need to make the right decisions to help us stay on course, based on the right information. The current number of transactions is stable. Still, I don’t see this period as an opportunity for bottom fishers, which—I should point out—isn’t what we are anyway. In general, we look at factors like high growth, high quality, strong product. Like our recent acquisitions of XCM and eOriginal show.
Read the full article (in Dutch).
Read highlights (in English).