EXECUTIVE INSIGHT
Kevin Entricken has been CFO of Wolters Kluwer since 2013 , having joined the global information services company in 2003 . Before that , he spent five years at information publisher Reed Elsevier and , prior to that , spent eight years at EMI Music Publishing .
In one way , deciding on how to spend your organisation ’ s cash could be compared to moving the dials in a recording studio : do you want to invest more in this sector or dial down dividends to shareholders .
As Kevin explains , capital allocation is really the most important duty of the C-suite .
Q . HOW DO YOU PERSONALLY DEFINE CAPITAL ALLOCATION ? WHAT DOES IT ACTUALLY MEAN ?
» Capital allocation is the primary job of the senior management team as a company , that ’ s probably where we add the most value . At Wolters Kluwer , we have , I would say , three priorities for capital allocation : investing in the business , both organically and through smaller bolt-on acquisitions , paying down debt and rewarding our shareholders . So we try to strike the right balance between those .
Q . GOING BACK TO YOUR MUSIC BUSINESS CAREER , IT ’ S LIKE YOU ’ RE AT A RECORDING DESK WITH THREE DIALS , ONE BEING INVESTMENT ,
ANOTHER PAYING DOWN DEBT AND THEN PAYING DIVIDENDS TO SHAREHOLDERS . SO IS IT A QUESTION OF DECIDING WHICH DIAL YOU ’ RE GOING TO MOVE UP AND DOWN ?
» I do think it ’ s a balancing act . Right now , we invest about 11 % of our revenues in innovation , new products or product enhancements . And that really is quite critical to the success of the business because the things that I ’ m investing in today will probably not come out to the market until two , three years from now . At 11 % of our revenues , I think we ’ re striking the right balance between making sure we are being innovative and building the business stronger going forward .
Q . HOW DO YOU DECIDE WHAT TO INVEST IN ?
» Our preferred method is investing organically , but sometimes there is an acquisition out there that really helps your speed to market in a way which would take much longer doing it organically .
We certainly look to buy businesses that are EPS accretive in the first year , which means we usually don ’ t buy lossmaking businesses , and then we look to make sure we get an attractive return . So with that sort of financial discipline and the strategic component of what we ’ re doing , I think we do try to strike the right balance . fintechmagazine . com 153