Before people take a step into the limelight, they must consider any skeletons stashed in their closet - and which of these to disclose in advance: anything from a criminal record to a CV that is not wholly truthful to exaggerated expense reports. Undisclosed and later uncovered by third parties, they can seriously damage a person’s reputation, and even destroy a career.
Companies can have skeletons too. The possibility of being caught out during a stockmarket listing, and the risks that are associated with that are just as high as for a company as for an individual. After all, the company is under close observation from numerous investors and financial analysts, all of whom are focused on the value of the company.
Potential issues that could arise can lurk in complex and obscure M&A transactions, conflict of interests between managers and companies, litigations, elusive accounting practices and booking processes, and dubious CVs to name a few, or even criminal acts.
The recent cases of research reports published by Hedgefonds about Ströer, Wirecard and Aurelius, are reports that toe the line between fact and libel, show that it is topics not clearly communicated from the outset can come back to haunt the company. Regardless of the actual facts, a report like this can massively damage the company’s reputation. In the three named examples, the stock market price fell significantly – incidentally, the exact goal of the initiators of the research report.
You can apply the same lessons for a politician with ambitions to become chancellor as you can with a company that wants to become DAX listed: take the bull by the horns and communicate about your skeletons in a honest and open way. Voters and shareholders will appreciate it.