Staring Down the Banks

How Vanessa Wittman, CFO of Marsh & McLennan, got the best deal from the capital markets.
David KatzMarch 29, 2010

It was an odd time to dish out tough love to your banks. But in early 2009, not long after becoming CFO of Marsh & McLennan Cos., Vanessa Wittman balked at investment bankers’ pricing plans for a $400 million MMC bond offering. With her finance staff quaking at her hard-nosed approach, Wittman suggested to the bankers that she “had made a horrific mistake in judgment in choosing them as the underwriters to pump up the pricing.”

It took Wittman about an hour to get the pricing she wanted, she recalls. Forget that this was in the midst of a fierce credit crunch and that finance officers at the insurance brokerage and consulting company weren’t used to talking turkey that way: the new CFO was coming from a different place.

Compared with Wittman’s four years of running finance at Adelphia, the scandal-plagued cable company, negotiating the bond offering was easy. She had joined Adelphia in 2003 as part of a new executive team that oversaw one of the most complex bankruptcy cases in U.S. history. Before that, she’d helped 360networks, another cable company, exit from Chapter 11.

Although MMC was on a far more even keel than her previous two employers had been when she joined them, her new job turned out to be tougher than she had expected. Her start date is instructive: Wittman joined MMC on September 10, 2008, just five days before the collapse of Lehman Brothers signaled the start of a global economic crisis.

As it did for many CFOs, the credit crunch presented Wittman with the challenge of rearranging her company’s capital structure to meet a liquidity squeeze. In early 2009, with revenue hard to come by, the company faced the prospect of $400 million in senior notes coming due in June. But the bond offering, one of the few done by a financial-services company at that stage of the recession, enabled MMC to meet the obligation. On the strength of the issuance, she was able to negotiate a $1 billion revolving credit facility in October, thereby extending the company’s borrowing capability through 2012.

In a recent interview, Wittman told CFO that with the financial crisis largely over, she is trying to integrate the “siloed” finance functions of MMC’s home office and its five operating units: Marsh (an insurance broker), Mercer (an employee-benefits consultant), Guy Carpenter (a real estate broker), Oliver Wyman (a management-consulting firm), and Kroll (a risk-consulting firm). An edited version of the interview follows.

What skills of yours came into play in MMC’s quest for liquidity in a very tight credit market?

The ability to not worry about whether bankers’ feelings are hurt. We drove our bankers really hard. If you have gone through the kind of liquidity crises that I’ve been through, you sense when to start worrying about paying your bills. I have an amazing treasury team here that was absolutely beside itself a year ago. And I looked at our balance sheet and said, What are you worried about? We can make payroll.

Vanessa Wittman

There were lots of terrific historical relationships that MMC had. But I had some relationships with what I viewed as real go-to banks that had helped me through prior crises at 360 and Adelphia. Combining the historical MMC relationships with those from my past created a dynamic in which we put together a really terrific bank group on the bonds. And then we were able to look those folks in the eye and convince them that we were the right bet to make on a multiyear revolver when several of the leading institutional CEOs had said they hated the revolver business and didn’t want to go anywhere near it.

What challenges do you face in harmonizing the finance function at MMC?

When I arrived, the corporation had six finance teams. Each operating company had a finance team, and then there was the corporate-center team. It’s a model that I just don’t think is viable. Because this company was built on acquisitions, we are constrained by many legacy financial systems. We want to maintain our control environment while creating better business information for our leaders — but in a manner that is not siloed.

What will you achieve by eliminating the silos?

There’s a lot of cost embedded in there. One person could be doing the same job for multiple operating companies. I also think that we will be able to create more-challenging opportunities for people. Streamlining our finance team will enable good people to shine a bit more than the current structure would allow them to.

When do you expect to finish the harmonizing?

I would like it done last quarter. But I want to avoid laying out a structure or a path that isn’t supported by analytics and dollars and cents. I put together a team of people from across the operating companies that’s beginning a deep dive into how we can create efficiencies. I would expect that to take us through the third quarter of this year. Then I’d love to get the planning for the execution of any changes that we might make done by the end of the year. Then would come at least two years of work on the people processes, and probably longer on some parts of the systems. It’s a multiyear plan that’s just leaving the starting block.

How does being CFO of a company like MMC compare with being finance chief of Adelphia?

It’s a lot of fun to work for a place in which the intellectual horsepower at any one of five operating companies is tremendous. Some days, of course, you wish that you made widgets. But our businesses help our clients manage risk; in this environment, it’s hard to find anything that’s more important. On the other hand, there are days at MMC when I see our assets ride up and down the elevators. It’s a very different feeling from when your assets are in the ground. At Adelphia I always knew where my assets were.