When cruising in the 21st century...

This pharma company is not different from other companies but it may have gone public to early; did not make it over the critical hurdle; the share price fell apart a few months after the final road show.

There is no business like engagement business. 
This pharma company is not different from other companies but it may have gone public to early; did not make it over the critical hurdle; the share price fell apart a few months after the final road show..
Published 2015-10-08

There is no business like engagement business

So apart from struggling with product development and staff problems, Tom, the eager young MBA at the rudder, is increasingly feeling the pressure from the board and main owners over the poor stock performance.
    
The investment bank got it all wrong; going public was not heaven. In fact, it was the basement next to hell; and the problems started when the company went public. When private it was possible to sort out the problems one at a time with the board and a few keen investors. Now everybody is watching while the liquidity is slipping and the chances of a rights issue is getting slimmer.
    
It is clear that too many companies go public without a real plan for stakeholder engagement. It is also clear that the investment banking horizon stops at the initial public offering and that the management of public companies are poorly equipped and trained for interacting with the capital markets.
    
The old myth that if management looks after profit the proper market value will appear out of thin air is still out there; yet to be killed. So is the myth about Santa Claus. You should not laugh at your kids for believing in Santa Claus if you believe in the perfect market.
    
Shareholders are like everybody else and need to get the chance to like your company. This is difficult for many companies as they feel restricted by stock exchange rules and insider regulations but this is a clear misunderstanding.
    
All companies need to stop the focus on historic financials and give the world a chance to participate in it strategic efforts.
    
We think it is a matter of reframing. Just like in marketing, the CEO need to get used to market the companies to the shareholders and all stakeholders. Let us get the show on the road!
    

Ulf Löwenhav


The article was written by Ulf Löwenhav
Send an email to ulf.lowenhav(at)reaktionvalue.com
Twitter @ulflowenhav

 

EQapital.com

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