Building a Portfolio of Skills with Stephen Kaufhold

Welcome to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week I talk to treasurers about how they built their careers, where they are now, and where they see both themselves and the treasury profession going to next. In this week's show, I'm delighted to be joined by Stephen Coffold, the senior VP and treasurer at Allegan Now Allergan, a global pharmaceutical company. Focus on developing branded pharmaceuticals devices, biologics, surgical, the lot, all in the medical products world for patients around the world. Now again, Steven will actually explain that a little bit more later on the show. As always, each show we're going to leap straight in. Steve, take me back if you like, how you first ever discovered treasury. Back at the beginning we'll go through and then we'll talk about your views on the future of treasury and everything else. But so let's perhaps go back to your degree days and how you discovered the wonderful world of treasury as it were. Over to you.

Sure. Thanks, Mike. And first, thanks for the invite to participate in this and I really look forward to the conversation. You know, regarding undergraduate school, I was a business undergraduate with a concentration in economics and finance. Had a lot of accounting classes, advanced accounting, cost accounting. But I knew deep down I didn't want to be an accountant. And I really liked the finance aspect of it. I was kind of following the stock market and so forth. So I wanted to do something on that spectrum, whether it be in Wall street or working for a corporation. It may sound corny and if you looked at my first resume out of undergraduate school, it would have said to get a job into Treasury. It took me a few years. I started out as a credit analyst or actually I started working out in consumer finance for US bank, which is no longer around Security Pacific, and then moved to AT&T credit Corporation, as it was known at that time as a credit analyst. There was a Treasury job for a Treasury analyst opening up this was in January of 1988, and jumped at the opportunity and been glad ever since.

And then you sort of made some good early moves within Treasury. Talk me through the development for you. You said, well, it's amazing, you know, I've not heard of many people. A lot of time we say people accidentally discover treasury, but you have this drive towards treasury, which is unusual in itself. But how did you then grow your treasury career? Did you then choose each of the roles, saying, I want to build out on this or what happened?

Sure. As we thought about treasury back in those days and I attributed A lot to the leaders that I had. It was important for people to rotate through the various different treasury roles. So for example, in cash management, a lot of times when we hired people into treasury, that's where they started. We kind of viewed that as a good foundation, you know, cash management, bank accounts and understanding all that. And after that individual spent some time in there, then it was moving into one of the other roles within Treasury. Whether it was on the capital market side, which was really the debt execution, FX hedging, whether it was in securitization, we were as a leasing company, that was one of our financing tools. So we took the opportunity to rotate people through the various different disciplines within Treasury. So really creating, creating a well rounded treasury professional. You know, they may not be an expert in everything, but again they're grounded in all those different functions.

Again, when we get later on the show, we'll talk about technology and the future of treasury. And I've talked to people in previous shows about, you know, wire transfers and, you know, fax machines and things. Obviously Treasury's evolved over the time, but when you first started, when I first started recruiting in it, it was quite different at the beginning. And it wasn't something that you sort of, when you're maybe interviewing one of those cash guys, you weren't saying, right, which systems have used or everything else. But how have you seen that sort of evolve since your early days?

It's night and day difference. I mean, I remember again, there wasn't really much in the way of bank systems back then. Again, from a cash management perspective, you would be using whoever your lead bank's system was to release wires. Again, it was very primitive. A lot of times it was through phone calls to the bank. Remember on commercial paper, we were a big commercial paper issuance. And those days trades would settle by runners running trade tickets back and forth. And today you kind of fast forward. Everything now is done either through Bloomberg terminals, whether it's trading fx. So you're no longer getting FX traders on the phone. So it's really leveraging technology today. So it's really a world different from when I started.

And when you did start. So you made those moves, was it a very planned progression, did you think? Right. You know, now I've been system manager, now I want to do the corporate financing. Now I'm going to do global fund. You know, you were looking to that as you were sort of filling out the gaps in your resume.

Absolutely, absolutely. And probably one of the things I regret was not taking an overseas role, even though That I had responsibility for international Treasury. It was really all managed out of the U.S. i mean, for example, back in the 90s, we actually started an Australian commercial paper program and we would actually trade that from the U.S. so we had no people on the ground in Australia. We would be in the office, Australian hours, placing that paper. So as I progressed through my career and eventually became an assistant treasurer, now you say, okay, Steve, what's next? Do I want to stay in Treasury? Do I want to go into another finance role, whether it's in business development, whether it's in financial planning and analysis, or do I want to become a treasurer? Now, at the time, the person who I reported to, who was treasurer wasn't much older than I was. And that individual was committed to the company. And again, for family reasons, it was working for them. So I really didn't see them moving on. So then what do I do? Do I now just stay at at and hopefully things work out within the company. And again, there's no guarantee that if that person decided to move on that I was going to get the nod and that going to bring somebody in from the outside. And that's when I took the opportunity, when it rose, of a much smaller company, that being Virgin Mobil, who was looking for a treasurer, they were building out their infrastructure because they were transitioning from a joint venture to a public company. And I said, hey, here's the opportunity to get the treasurer's title. And secondly, here's an opportunity to work on an ipo. And I think from a Treasury perspective, that's one of the things that a treasurer or a Treasury professional would love to have on their resume is the opportunity to take a company public. And certainly, as you know, Mike, those opportunities are far and few between.

Yeah. And when you were sort of convincing them that you were the beauty parade of people, what did you do to enhance yourself? I was talking to a couple of clients just recently, or candidates, rather recently, and they were like, oh, what do you think of my resume? And I was like, it's great. Really fills out, you know, ticks a lot of boxes. However, this client, these are their pain points that, you know, you need to highlight this or bring this out. You know, so people often say to me, or what's my resume like? And stuff. So look, it's a great building block, but this is going to be their issues. Now, as you said, you've not been through an IPO before, but they were like, right, we're going to ipo. It's great, attractive to you, but what was the convincer to them? What was saying, oh yeah, but why are you the best person then?

Sure. I think, you know, when you looked at going from CIT Group and again we could talk about the various acquisitions, what led from AT&T Credit to be the CIT Group. Virgin Mobile was a much smaller company, 425 people. So it was very important that the people that were being brought on demonstrated some skills. One, they were very well rounded as I view it from a Treasury perspective. Having spent time on cash management in the capital markets international, it gave me that broad based treasury background. Okay, so that was skill sets or skill sets that I brought to the table. And what was also important too is from a personality perspective and also demonstrating that, you know, you're a team player and you know, you're. And again, it's more of an entrepreneurial type of spirit they were looking for at that point. And it's really again drilling down on teamwork and being, you know, not afraid to roll up sleeves and help out wherever you can to move the ball forward. So I think it's a combination of the skill set. Even though I didn't have the ipo, I had the capital market markets experience and then also the teamwork aspect and talking about team.

So, you know, probably a bigger team that you were leaving to then. Was it just yourself when you first started there or how was it sort of structured?

Sure. When you think about it, when I moved on from the CIT, probably at the time we had about 40 people within Treasury. You know, the biggest, let's say 20 of that or a little over 20 of that would have been on the securitization side. Whether it was on the execution or the reporting that goes along with securitization, that had to be done on the monthly basis, the monthly securitized reports. When I went to Virgin Mobile, we were a total of two people, myself and one other person. Okay, so it's a big night and day difference. But again for me that carrot was the treasurer's job. And then also picking up that new skill of the ipo. And certainly kind of fast forward today to Allergan. When you look at the treasury organization here, including my admin, we are a total of eight people. So I think I've heard benchmarks and Mike, you probably know more about it than I do, but people say the benchmark is about one treasury person per billion of revenue and our revenue is a little over 12.5 billion today. So it's been a very lean operation.

Just going back to you dropped from that 40 to 2 and it was like, right, it's your lunch break now. No, your lunch break. And again, we'll have listeners to the show who are in that situation or, mate, how did you cope? How did you manage? What were your, you know, you're blocking and tackling, but how are you doing it? What, what are your key things that you're trying to make sure where you don't drop the ball when you, when you move into that. I know you'll have your priority list, but how do you drive the treasury forward towards the ipo?

Yeah, I mean, it was a lot of long hours, you know, I won't kid you on that, because it was also interesting at that time because the JV Partners and you hear about this a lot of companies too. So it was really kind of a dual track. It was exploring taking the company public as well as through a sale, through a private sale. So, you know, the challenge was two different banks leading both processes. So as you're working on the S1 filing and getting that filed, the other banks chopping at the bit to get on your calendar to get the pitchbooks together, get the information together for the private sale. So when you get the initial S1 filed and you usually have about 30 to 60 days, you're waiting for SEC comments, that's usually a time to decompress. Unfortunately, the day we got the S1 filed, the next day, boom. Now we're dealing with the other bank on the private sale. So it's being able to multitask, I think, at the end of the day. And, you know, if you're doing a job that you love doing, and certainly, you know, that's may sound corny, but, you know, I really don't look as treasury as a job, you know, and it's something I enjoy doing, you don't mind taking on those additional hours and you know, whether it's working in the office or working at home at night just to get the job done, went.

Through the ipo, as you say, immediately thrown into other deep end of things. But you, you're obviously swimming through that period. But how did then the role evolve as a. And would you contrast sort of private to the PLC environment and the demands on you as a treasurer?

Well, I mean, I think so, if I follow you correctly, I mean, again, going from the Virgin Mobile, which was a private company, which was an interesting prospect because you have two masters, you have both JV Partners, and again, this was a joint venture between Sprint and the Virgin Group out of the uk. So they both have their own priorities and so forth. So it's really kind of managed their expectations and their deliverables and then certainly going to Allergan. When I joined the company, it was known as Watson Pharmaceuticals, which was a Corona, California based US generic company that I never heard of. When Virgin Mobile was sold, Sprint decided to purchase us. My manager of IR then moved to Watson and I said to her, where are you going? I'm like, I've never heard of the company. They're in New Jersey. I made the transition then because they were looking to put in place the infrastructure. Believe it or not, the person at the time, and this was a company with about 2 billion of revenues. You had the person who was a CFO, he was a controller, he was the head of tax, he was the head of business planning. Treasury was really a part time job between himself and the head of FP&A. However with the new CEO they bought on several years earlier, you know, he wanted to really take the company to be international and to do that you need to have the infrastructure structure in place. You needed to have a controller, you needed to have a treasurer, you needed to have a head of tax and so forth. And that was my door, you know, that I was able to come through. And you know, thankfully you hear a lot about pharmaceutical companies that they like to hire within the industry, but at least with Watson, you know, they were open minded to individuals from outside of the pharma industry.

And you walked in the door. Well, you've just described it was at least it was a blank sheet of paper. You can make it up as you went along.

It was, it was, it was. And then, you know, this was back in 2010 and then we did our first large acquisition which was in 2012. We actually closed it during hurricane, I believe it was Hurricane Sandy on November 1st of 2010. You know, that was an acquisition that, you know, probably in fruition, took about a year or so as we worked through due diligence, doing the analysis and so forth. And at the time, you know, as I mentioned, this was a Corona, California based team. I was in New Jersey. The rest of my treasury team, which was about four people, were in Corona, California and I didn't see them for 12 months. So it was very important to have some really good people and fortunate. I did inherit a very good treasury team because I didn't see them for 12 months as I was working on that acquisition. And then if you asked me at that time, I would have said, hey, it would have been Another two years for the next acquisition. But I would have been wrong because it was almost every year on the, every year on the year we are acquiring somebody, whether it was in 13, it was Warner Shilcott, 14, it was Forrest, 15, it was Allergan. We changed our name to Allergan at that point. And then, you know, I thought at that point, because the Allergan acquisition was 72 billion, okay, we would be done. Lo and behold, we announced then we were selling our generic business, the Teva, for 40 billion and potentially we were going to merge the rest of the business with Pfizer. So if you think about it, we had three things going on at one time. The integration of Allergan, the divestiture of the generic business, and potentially the merger of the rest of the business with Pfizer. So let alone each one of those is a major transaction. But we had three of them going on at the same time.

Talk us through the people aspects of that. So the people transition. You said you were east coast. Your other four guys were over in Corona and you were managing it then across there. But you know, how has it transitioned and what have you been like as a, you know, manager, director of those people? You know, both sure of doing it remotely, Even though it's one coast of the US the other. @ least you're nearly in the same time. You know, only three or four hours time wise. But what's in the mind?

Sure, sure. And you know, I was on the east coast because as I mentioned, you know, there was a new CEO. He lived in the, on the East Coast. And of course, as you know, Mike, headquarters is wherever the CEO is. So east coast was the administrat headquarters. A lot of our finance function was still on the West Coast. However, after that activus acquisition in 2010, the decision was to migrate the headquarters to the East Coast. So, you know, unfortunately, I did lose some good people. I was able to retain one and I still have her today. She's been with the company for over 25 years and does the work of 10 people. You know, it was then hiring new people here on.

In that case, I hope she's listening. You're paying her ten times as much. I mean.

Yes, I'll even give her a shout out. Debbie Wong, she is a phenomenal employee and a lot of the success of this company is due to her and the other individuals of the treasury team.

What's the key to her success? Why is she so successful?

Well, again, I think she's another person who loves treasury and Loves the work that we do. And I think when you look at treasury, treasury really has a front row seat to a lot that goes on within the business, whether, whether it's on the business development side, working on due diligence, working on integration. So it's a good place to be at the core of the company. I think that's what drives a lot of people who like Treasury. I think viewing treasury from outside, even business units or even other groups within Finance who may be adjacent to where the treasury group sits is they view treasury as a black box. They're not sure what exactly goes on within treasury and that's what kind of puts the onus on us to take the opportunities as other groups say, hey, can you come into my team meeting, spend 15, 20 minutes, talk about Treasury? What do you guys actually do? How can we help you? And again, this gives us the opportunity to present to them, educate them. And so As I said, 15, 20 minutes. Usually these conversations turn into be 40 minutes, 50 minutes. We run out of time and people walk away with a different impression of treasury and we kind of look to partner with these business units to move the ball forward.

Yeah, and I've spoken recently to Severin from European Treasurer over at Honeywell. She does a very similar thing and in a way she also takes it out to the masses in a little way. She sort of lectures at a local university or engaged with the guys there to sort of educate those guys and then gets her junior employees a lot of the time from there. I told her to stop doing that because we are a Treasury recruitment company, we do need. So we tried to stop that, put a lid on that. But then again, one of the other things, just like yourself, and I was going to ask you, she's then also by involving so many other people like the finance analysts and things, whenever one of her vacancy comes up, she doesn't even have to go onto LinkedIn, she just puts on the internal job board and they've got people knocking at the door saying, oh, can I apply? Do you find that as well yourself?

I have not lost anybody from a, from a Treasury perspective. Debbie, who's on the west coast, has been with the company for 27 years. The rest the of two of my treasury folks have been with me since 2010 as I hired them. As I mentioned earlier, as we move the treasury and the finance functions from the west coast to the East Coast, I haven't had really to experience replacing people and having to go out and hire people to replace people who have left. I did Hire several years ago, a Treasury analyst. That was a person straight out of college, no treasury, treasury experience, dual major, both economics and psychology. And again, this was an opportunity to bring in a very junior person, kind of put him through the same paces as I mentioned earlier, you know, starting out in cash management, taking advantage of opportunities, whether it's now fx. So this person is actually doing the FX trading for us on Bloomberg, also getting involved in systems since it's been relatively quiet on the acquisition front. And integration, which you can imagine is always just a constant state of change as you're integrating businesses and so forth, bringing on treasury technology. So, for example, a year, year and a half ago, we brought on Quantum and we're implementing that. So this individual now is working on that as well. And if you think about it, in about three years time frame, coming in with no treasury experience, very good understanding of cash management, actually is leading up our fbar, which is the foreign bank accounting reporting that we need to do here. Us, he's working with our outside consultants in doing those reports. He's now doing FX trading on Bloomberg. And also on the technology side, the Quantum implementation. So it's really, instead of trying to micromanage folks is really empowering people and letting them run with the ball. And again, I think that's what makes it interesting for the folks as well, because always in a constant state of learning, always learning something new.

And when you say learning, so just you've got the system side, you've got the sort of development for them. Where are you seeing the team develop? Is it just that they're sort of taking on more responsibility, different areas or how's it been evolving sort of thing?

It hasn't been dull around here in that, you know, when we sold the Te, you know, the generic business to Teva, and you know, we got in approximately $40 billion of proceeds for that. So up until that point in time, and I think this is going back to my leasing company days and the CEO pounding on the table saying cash is an inefficient asset, we should be running the tanks dry and so forth. We were managing the company with about $500 million of cash globally. Now you wake up and the next day you come in and now you've got $28 billion of cash. Most companies grow into that cash over time. So you're able to put in policies, procedures and build out an infrastructure to manage that amount of cash. It was really for us, a flip of the switch. You know, $500 million one day, $28 billion the next day. And now, you know, you want to get that cash invested, maximize the yield again, certainly not risking the principal. So again, that was a whole new opportunity for folks to learn and a whole new part of the business. So it's always been something fresh and then, you know, taking the rest of the proceeds, thinking about capital allocation, you know, going to declare a dividend, are we going to do stock repurchases, managing that. And then we also had a position in Teva shares that once the lockup expired, having to liquidate those shares. So it really wasn't all right, here's the same treasury functions that we're doing day in, day out for the last nine years. But as this company continued to evolve its new areas, whether it, like I said, managing large cash balances, stock repurchases, selling stock stock dividends and so forth.

And looking at that evolution, you know, of the team as well and things like that we've touched on, you've got a new system coming in there, you've got all these new things. Where do you see the evolution of the Treasury? Everyone's going on about, you know, all the latest companies are AI and robotic learning and everything else. But you know, is that the core of things that, you know, automate as much as you can get, get rid of the labor stuff and this labor intensive.

But you know, I think you're absolutely right, Mike. I think that's where it's heading, the use of robotics, AI. I think, you know, treasury is going to become more digitized as we get into the digital world and so forth. And it's really looking at those type of, you know, functions or areas really to automate as much as you can, especially the low hanging fruit and you know, the non value added aspects of treasury, whether, whether it's consolidating bank statements and so forth, which then gives the ability for treasury to really focus on the value add. And at the end of the day, I believe the only way treasury is successful or how to judge a Treasury team is, is the group adding value to the business.

Just take it back a stage and looking at you say new Virgin Mobile as we talked about is you and one other, and there'll be people listening today that they're, you know, that's them and one other and you know, we've talked a lot of these shows about, you know, bring in some technology and do all this and then the guys are like you, they're all, you know, as you were back in, you know, 10 years ago, it's just them and they go, hang on, I don't want to add another two or three hours to my day to get this technology implemented. Or, and you talk about the low hanging fruit. How do those guys do it? You know, what, what sort of. If they're listening and you're thinking, guys, dishes, what I would do, they're blocking and tackling. What sort of advice would you give to them?

Well, I mean, certainly undertaking any type of system implementation, it's very hard for a Treasury group to do it by itself. It has to be sponsored by the executive management, the CFO in particular of the company. You need to have IT support. And especially in this day and age with internal control socks and so forth forth, you need the accountants, you need the tax folks, you need the Sarbanes Oxley folks, you need the internal auditors, you need the external auditors. So I wouldn't recommend a Treasury group saying, hey, we're going to go and implement now a new treasury system. You're not going to be able to do it by yourself. You need to have the buy in of all the various disciplines within the company and that's the only way you're going to be successful. And we had that support here within Treasury. So right from the cfo, as we prioritize what we're going to do from a technology perspective, within the finance organization, the treasury system was one of two systems that had that sponsorship. And that's critical because I've also been part of system implementations, you know, in prior careers, which never got out of the starting gate because again, the support wasn't there.

Yeah, you need everyone pointing that right direction and everything else.

And I think, you know, from an individual perspective too, as you start implementing these systems and you're seeing, hey, wow, this is pretty cool, this is making my job more efficient and so forth, you see the benefits of that. So you don't mind putting in the.

Sweat equity and just looking to the future. Less about the stuff that you're looking at now, the AI and all that. In Europe, everyone's gone on about Brexit till the cows come home, everyone's bored of it now, move on. In the US there are different challenges, political and economic and everything else. But what are you looking at as a Treasury? You're thinking, right, these are the things on the horizon. A lot of the time I see CFO is probably pushing you forward and we've heard that a lot from treasurers, that you're the front man, you're like, off you go, Steve, look at all this stuff. What are they saying to you, what are your thoughts?

Yeah, I mean, from a Treasury perspective and the conversations I've had with the CFO here, it's really about capital allocation is extremely important and how are we deploying our cash? How are we investing in the business? If we are divesting of an asset, let's say it's an accretive asset. From an EBITDA perspective, taking a look at, okay, what are we going to do with that proceeds? Is it going to be invested back into a business development opportunity? Are we going to buy in stock from a dilution to manage dilution? Do we want to pay down debt? One of the focuses for us is because of all the acquisitions that we've done, we over the years have taken on our debt balances have grew dramatically. Leverage went up close to 1.4 times, which was a little bit above what our ratings would dictate. So it was very important for us as we thought about how we redeployed the capital, really deleveraging the balance sheet to address stakeholder concerns, whether it was debt holders, equity holders, or the various rating agencies. Again, that's where the focus has been for us, is really on the capital allocation.

Okay. As we come towards the end of today's show, as we do every week, we'll put the LinkedIn profile for yourself into the show notes so people can connect with you if you want them and ignore them if you do, don't. That's fine, fine. But you look back over it and, you know, I think a lot of people will look at your profile and see, wow, that's a, you know, great progression. We really got into some of the nuts and bolts there. But what advice are you going to give to the analysts, the managers, you know, maybe even some of your peers, if you like that, if they look at, you know what, I want to be similar to that. I want to have the same profile. What, what? The nuggets of advice you give to people as we wrap up today's show. What would you say?

Sure. I mean, when I started in Treasury, I'll let you do the math or I'll let everybody else do the math again, starting in January of 1988.

There you go. If you go to math, too, back.

In those days, a lot of times from a career perspective, it was cradle to grave with one company that has changed dramatically. And we didn't talk about all the different ownership changes that we went through. And it almost seems like five years in one job is a lifetime. Unfortunately, I think at the end of the day we all become contracts at the end of the day. And it's important that as individuals progress from a career perspective, you know, they're really thinking about fulfilling or filling out that resume, taking advantage of opportunities within the company. You know, when somebody comes to you and say, you know, Steve, we want you to spend some time in cash management. And some people may think that cash management is not the excitement part of treasury, because I think if you give people most choices, they want to be on the capital market side dealing with the banks and so forth. But I think they would be doing a disservice if they're not taking advantage of those opportunities and really kind of having that solid foundation from a Treasury perspective. And then sometimes, in my case, I had to make the jump from the CIT Group to Virgin Mobil to get that treasurer's title, to get the experience of taking the company public, which I would not have had within the CIT Group, that sometimes you may need to take a look outside the company, take that risk, take that leap of faith, knowing at the end of the day that you're going to be better off at the other end, no matter how that opportunity to turn out. Because now you're adding new skill sets to your career development. And again, that's just going to make you more valuable as you progress and pursue other opportunities.

So a portfolio of skills is what you're aiming for.

Exactly. Yeah, exactly. Even though while I had international experience, you know, I never. And, you know, getting a little late in life and, you know, with family commitments and so forth. But if you're starting out and there's an opportunity to take an international assignment for a year or two and you have that flexibility, you know, that's something that everybody should take advantage of.

Yeah. Fill in all the gaps as well. Well, thank you, sir. Great advice as always. Again, everyone, connect to Steve grow his LinkedIn profile. Hope you enjoyed Today show. I definitely enjoyed. It was great fun and well, we keep talking to Steve in the future as his career continues to grow. But thanks for your time today and look forward to seeing you soon over in the U.S. great.

Thanks, Mike. Appreciate the time.

Thanks very much, sir.