Me And My Partner: George Matthews And Steve Bellamy

George Matthews recruited Steve Bellamy as his finance director when Sherwood International plc was near collapse in 1994. They have reshaped it as a leading supplier of software systems for the global insurance market with 400 staff
Click to follow
The Independent Online
George matthews: I joined Sherwood in 1981 from Rank Xerox, as a business consultant. I wanted to be a bigger fish in a smaller pond. Sherwood was a family-type company, with everybody rolling up their sleeves. There were 150 of us supplying software services to the Lloyds' insurance market.

The company was floated in 1985 and went on an acquisitions spree in different sectors, with no consistent strategy. I was made CEO in 1992 and my boss became chairman, but I wasn't leading the company.

Financial problems at Lloyds meant Sherwood made massive losses in 1993. A new strategy was agreed, to get rid of everything that wasn't insurance, close overseas operations and bring management back to the UK. Our finance director and chairman left, and I was looking for a new finance director. Then I met Steve.

He came for an interview and I took to his strong City relationships. I'm good operationally but I'd had minimum exposure to the City. Steve understood it; he was one of them.

Most of our board is young, and it was important Steve could come into a culture of "work hard, play hard". There are no airs and graces here.Him being a Kiwi helps. He's single-minded, focused, with a sheer determination to succeed. He needs a lot of convincing if he thinks something's not right, but he's a good sounding-board. We work in next-door offices and we can walk in and say: "Look what this guy's done", or: "What do you think of this idea? Let's discuss it over a pint tonight".

We set aside three years to turn the company round, and did it in two. One problem was cost base: we used to run computer systems for other companies, and we weren't big enough. Then in 1995 we acquired a Glasgow technology company, Beta Computers, which subsequently produced our flagship software, AMARTA, a system which offers customised solutions for general insurance, life and pensions.

There was a lot of pressure, but I was never really worried. The thing driving me was pride. After 1993, we met the banks every month because we owed pounds 3m and we were trying to stop shareholders selling. There was a lot to prove. When we announced results after two years, there was a big sigh of relief. We said to shareholders: "Right, we've turned it round, now give us support to grow". Before, they would have shot me if I asked for anything. Then the shareholders said: "Can you grow it?" That was like a red rag to a bull.

For me, the whole City experience was new. Steve taught me to be clear on the story you're selling; to tell the people you are dealing with enough to satisfy them; and to try to over-deliver. Before, I would have probably told them what they wanted to hear. We do have a reputation now for being cautious, not trying to do too much, too quick. That's very much Steve's doctrine.

He's learnt to adapt to client requirements. You can't just say "This is what I have - take it or leave it". You have to show them why they need it. Steve has tightened some of our negotiating skills, but he's also more willing to compromise. The corners have been knocked off him.

We approached our first US partner, Deloitte Consulting, in 1997. Now, a quarter of our turnover comes from the US, more than pounds 10m of revenue selling our systems, from a standing start. I can't remember how many trips Steve and I made together. When we were in New York, there were no hotel rooms except at the Waldorf, at $600 a night. I flew in at 7pm, but when I got to the hotel there were cases in my room. They were Steve's. He arrived 10 minutes later and they'd given us a suite, so we had to put up with each other's snoring. We always end up in situations like that, but we don't mind getting the mickey taken out of us.

It's like being with my wife: we will say the same thing at the same time. We're both mad about rugby and sport: I'm from Ireland and they lose, he's from New Zealand and they win. He does recognise I'm the chief executive, but if I said: "Steve, do this" there would be no point. It's not that sort of relationship.

He knows I'm passionate about the company. He used to say that was a weakness, but a couple of years ago, he got the bug. Until then, he'd been a dispassionate finance director who could come in, do the job, and leave. I think he does feel for the company now.

Steve bellamy: Before Sherwood, I was a director of Brierley Investments. We were considered corporate raiders, but we invested in companies we thought were underperforming, either because management was bad or they had structural problems.

One of the great things was that you controlled your own destiny. You weren't selling to people, you were investing in other people's companies using shareholder funds. They were the people you had to answer to.

In 1993, Brierley closed London operations. I was asked to go to Hong Kong, but I had four small children so I started to look for another job. Sherwood had unique qualities, but a lot of problems. Once you put a focus on the former and get rid of the latter, the value will come through.

My first impressions of George were that he was very committed, more like a founder than a CEO with a small equity holding. He lives and breathes Sherwood: he was someone who would always do the right thing for the company. He's also very technically aware and intellectually capable. His capacity to soak up information is tremendous. When you see people challenge him, he's right 99.8 per cent of the time.

I felt I could work with him. He was not somebody who would say: "I'll come and ask you every now and then whether I'm doing the right thing". He genuinely needed and wanted and was prepared to receive help.

Sherwood was more than pounds 3m in debt, with a share price equivalent to 20p. About pounds 10m of their pounds 25m business was in small, troublesome acquisitions. We needed to sell those businesses and focus on cash collection.We needed to be aggressive and imaginative about cutting costs.

It took us 12 months to work on the same wavelength. I don't pretend to have all the answers, but I like to think I challenge things hard so we're doing something for the right reasons. When I first came, I had an accountant's mentality: "These are the rules, live by them". George's was more: "Rules are made to be broken". Where we are now is more appropriate - rules are guidelines, but be prepared for exceptions. We're on middle ground.

The turnaround was common sense. You might sell something you shouldn't have sold, but you've got cash for it and you're moving on to the next thing. The banks supported us but they were very nervous. Selling to clients was also difficult. They need to know you're going to be there in five or 10 years and you've got that financial stability. I think what we achieved was to grow turnover though we were financially strapped.

I have enjoyed the growth period. Turnaround came naturally, but this is a bigger challenge. How do you get a presence in global markets? We chose the route of partners in the key markets and we have relationships with three of the big five consultant practices, who have a boardroom presence and the ear of CEOs in major insurance companies. Last year 31 per cent of our revenue came from abroad.

George and I have become as close to being personal friends as we can, without being close personal friends. George is once-bitten, twice shy. He had a strong relationship with his former chairman, but that was under strain when the chairman departed. We see a lot of each other but we're both strong family men. If either of us left, we would probably develop the personal relationship a lot more.

Comments