As finance director of Europe’s biggest venture capitalist firm, Michael Queen is the money man behind a company that helps make dreams a reality. But the finance chief also has a dream of his own and working at 3i Group has given him the opportunity to live it vicariously.
At work, the chartered accountant from Leeds oversees the complicated finances of a corporation that buys and grows fledgling companies. He sees his primary role as one of communication and support to the firms ‘acquired’ by 3i.
But Queen’s initial dream was to be in charge of his own company. He says: ‘At university, I knew I wanted to run my own business, but I couldn’t see how to go about it. So I looked around and found the best way to get commercial training was to qualify as a chartered accountant.’
And despite the fact he is not running his own company, Queen seems very happy with his job, as it allows him to meet entrepreneurs who dream of running their own companies.
‘I see talented entrepreneurs all the time, people who are taking huge risks to fulfil their dreams. It’s very inspiring,’ says Queen.
But he adds that the gift of entrepreneurialism cannot be taught. ‘You have to be born with a high level of drive and self-belief that is not found in the average person. You must have a belief in yourself that is almost self-deluding to keep going despite all the knockbacks.’
As one of the leaders at the FTSE-100 listed company, Queen knows he is ‘incredibly fortunate’ in his role of FD, not only because of the inspiring entrepreneurs he works with, but also because his role is extraordinarily varied. Although his formal responsibilities cover the more traditional areas of financial control, treasury, tax, information systems and operations throughout the group, the area that takes up most of his time is communications.
‘I communicate with my shareholders for investor relations, with the government through our public affairs programme, and (with the other employees through) internal communications. I spend a lot of my time talking about 3i, what our strategy is, where the business is going,’ he explains.
As for his daily involvement in the more traditional areas of running the finances in the company, he says his work is limited to supporting those involved in these functions.
‘The only way I can do my job effectively is to make sure I have excellent people in all those areas. So if my head of tax recommends a particular tax strategy, it’s going to be pretty rare that I’m going to be able to second-guess his judgment. I also challenge my employees in terms of the overall strategy, and make sure that their thinking is sound,’ he says.
According to Queen, there are a number of key skills he and other FDs need in order to perform their job well, particularly in the post-Enron world when the job is so demanding.
One of the key issues facing FDs at the moment is what he calls ‘role creep’. ‘The FD’s job has expanded out of all proportion. Not only does he have the traditional roles to fulfil, but he has to be highly commercial as well,’ he said. ‘There is tougher corporate governance, the new international accounting regime and other huge changes. It’s quite a lot of strain for one individual.’
Delegation is the secret of his success in this demanding role. Queen says: ‘The key is knowing the strengths and weaknesses of your team. So you have to have a good in-depth working relationship with people. The other skill you’ve got to have as a finance director is, when it’s required, to move from a high level to great detail very quickly and be able to pick up detail on a particular issue very quickly.’
A third element that is also crucial to the role, says Queen, is being able to work well with people. ‘An FD’s interpersonal skills have to be excellent. He has to be able to communicate well with the people he works with. It’s no good just having an FD who can do the numbers.’
Good FDs, he says, have to be able to make their employees feel both supported and challenged. And he has to be able to get employees to perform well by helping them understand why their job is crucial to the performance of the company.
‘The FD has the best overview of the company, and communicating with his employees he can persuade them to see the importance of their roles.’
But Queen, who has hundreds of FDs working under him, has found the crucial people skills are the toughest to find.
‘There are plenty of people out there who have good financial control, but I don’t see the important communication skills very often. When we find these people, they go on to become chief executives because the same skills are required to be a good chief executive.’
Queen has a rigorous list of skills he looks for when recruiting staff.
‘The FD is an absolute key role in the companies in which we invest. We’re looking for someone with excellent commercial acumen, who really understands the commercial drivers of the businesses we’re investing in, but at the same time has got complete control of the detailed financials of that business,’ he says.
‘We’re looking for levels of performance across the whole business that are much more demanding than non venture capitalist-backed businesses would see.’
Looking at his background it is clear Queen never intended to be a run of the mill numbers man. He admits: ‘I joined 3i to be a venture capitalist. Most of my time here really has been spent being involved in investments.’
During his accountancy training at Coopers and Lybrand, he met venture capitalists and realised that their jobs were even closer to his dream of running a business.
So, after qualifying, he joined 3i in Leeds. A few years later he helped to set up a 3i office in Hull, and in 1990, was asked to be a director at the company’s London investment business. ‘That was 13 years ago and I’ve been down here ever since,’ he says.
But Queen hasn’t only reserved his talents to the private sector. He was also seconded to the Treasury in the mid-1990s, where he helped to launch the private finance initiative in the NHS, before returning to 3i as an FD.
Queen loves his work and says being a finance director is ‘phenomenal’ because ‘you get to involve yourself in everything’. ‘It is a great way of gaining commercial understanding of what is driving a business,’ he adds.
In addition to his role at 3i, Queen has other activities, which are vital to ensuring he does his day job well. He is a member of the British Venture Capitalist Association, which he chaired last year. He also belongs to the NHS’s capital capacity taskforce that identifies new ways of funding for the NHS.
And because he is FD of one of the country’s top 100 listed companies, he is part of the respected and highly influential FTSE-100 group of FDs, observing and advising on the changes to the UK’s financial reporting system from the front line.
‘We have debated international accounting standards on a number of occasions and the consensus is that most of the FTSE-100 will be ready,’ he says.
‘It is hard work but most people take the view that actually it’s better to have driven it forward on quite a tight timetable than allow it to drag over a much longer period.’
Despite enjoying his job at the country’s biggest VC firm, Queen does not give the impression that he has given up his dream of owning his own business.
‘I get vicarious enjoyment of working with entrepreneurs,’ he says. And when asked whether he has the ‘self-deluding’ belief in himself that is necessary to run your own business, Queen responds: ‘Who knows? You’ll just have to wait and see.’
- Despite warnings of record writedown, a sluggish stock market and a harsh economic climate, 3i finance director Michael Queen says its provisions for losses this year are not as high as they had been last year.
On reporting its results to March 31, the company revealed a lower-than-expected drop in the value of its investment portfolio, which fell by £1.16bn last year to £5.1bn.
Total return for the year was a negative 23.7% on opening shareholders funds, according to the company’s annual report.
The main losses in 3i’s portfolio came from a £379m provision for companies that may fail – £361m from private company devaluations and £453m from declines in its quoted holdings.
Michael Queen says: ‘High levels of investment in early stage technology companies in the three years to March 2002 combined with the current difficult conditions have resulted in a total return of (£671m) for our early stage technology business.
‘The downturn in other sectors and the fall in stock markets have resulted in negative returns for our smaller buyouts and growth capital businesses.’
But investors and analysts were impressed that the drop in the value of 3i’s investments were not as bad as expected. In March, the company had expected to make record provisions of over £800m from writeoffs and valuation downgrades on its technology investments.
Queen says that, although it wasn’t a great performance, the market has been very difficult and its return on shareholders’ funds is better than that of the FTSE all-share index.
He adds: ‘We are cautious about the economic climate but feel we are in a good position to take advantage of an upturn and, if conditions remain as they are, we will continue to make money.’