Financial markets and the reference shareholder: Dominique Cerutti’s strategy for transforming Altran

Dominique Cerutti, futur PDG d'Altran

Dominique Cerutti, futur PDG d’Altran

The new Chairman and CEO of Altran is going to radically transform the engineering and R&D businesses. In order to finance his strategy, he’s relying on financial markets and Apax Partners.

IBM: ordeal by fire

During the 23 years he spent with IBM, Dominique Cerutti learned one thing that was certain: a global giant with unquestioned leadership in over 150 countries can disappear. “In the 1990s, IBM nearly disappeared because it had not anticipated the value shift from information technology equipment towards services”. Dominique Cerutti saw hundreds of thousands of people laid off. He said “Never again”. He was also by the side of CEO Lou Gerstner, helping to rescue Big Blue. “IBM was saved by iconic chairmen”. Lou Gerstner invented the term e-business, which was the linchpin of his value creation strategy. “He repositioned IBM into services, concentrating on customer-focused IT solutions”. A CEO with a worldwide reputation who was to have a profound influence on the future Chairman and CEO of Altran.

Law of supply and demand

“My job is to be connected to our industry and to our customers. You have to understand the value shift expected by the customer so that it can be captured and delivered”. For a listed company, strategic repositioning must be comprehensible to the markets. “Communicating with the markets is a demanding and quite gratifying sport, because it is approached in a depoliticised way”. An approach that suits this enthusiastic boss, even if he has seen its negative side. “In a 100% public company, it’s difficult to undertake the profound transformations that need to be made. The markets don’t always leave us enough time for that”.

In order to shield himself against “market impatience” during the Euronext IPO that he carried out in 2014 as the Chairman and Chief Executive of Euronext Paris, Dominique Cerutti structured a reference shareholding comprising large European institutional investors. “The clarity demanded by the markets sometimes requires a more radical – or even brutal – approach in a world that is increasingly opposed to this. That pushes the directors not to transform a company in the way they would like to: when you’re judged on the next four quarters, you’re not going to invest in R&D with a three to five year payback period, even though that’s what builds a strong company”. Dominique Cerutti also highlights the “unfairness” of a market which, although it can react very positively to “anecdotal” evidence or, conversely, be excessively severe, is always right.

Altran: the best of both worlds

After six months at the head of Altran, Dominique Cerutti welcomes a mixed shareholder structure that provides him with “the best of both worlds”. Altran is listed on the stock exchange and has a minority reference shareholder: the investment fund, Apax Partners. “We are able to pursue a healthy value creation strategy: I’m not being asked to deliver cost reductions, but to go and capture value by transforming the business”. In strategic terms, Dominique Cerutti praises the “deft touch on the ball” shown by Apax Partners, which he considers to be better than the market’s.

“In the engineering and R&D sectors, the industry has radically changed. Customers expect high value-added intellectual and global solutions from us”. In the programme of the strategic plan recently unveiled by the Chairman and Chief Executive: a focus on the business solutions which matter to customers, cross-fertilisation, development of international business capabilities to ensure a global delivery that is unheard of in the R&D sector and globalisation of the business. “We expect this plan to deliver a huge amount of value. Fewer providers are able to achieve these levels of performance: I hope that I can contribute to the emergence of new standards of excellence in the industry”.

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