Customs Street Advisors

Recently, Nestlé Switzerland, the global nutrition, health and wellness giant, invited me to share my thoughts on the age-old shareholder-stakeholder debate on the company’s corporate social responsibility blog, Creating Shared Value.  The article, which was published today, espouses my thoughts on the growing irrelevance of the traditional arguments that have pitted campaigners, advocacy groups and activists against corporations. I conclude  that there has never been a better time to move from tense face-offs to constructive engagement.

Normative extremism in the shareholder versus stakeholder debate may well be on its way out. If shareholder value was the pre-eminent metric of corporate entity success in the past two decades, in the new decade it will be far less so. The undisputed twenty-plus-year reign of financialization could be drawing to an overdue end. Similarly, the exclusive rights on do-gooder patents that activist groups, environmental campaigners, social crusaders and community advocates have hitherto laid claim to might be nearer its expiry date than its partisans realize. After waging an acrimonious war for so long, veterans on both sides have almost failed to notice how close they are to a final settlement. My prognosis is that the fanatical bi-polarism of hardliners on either side of the debate will give way to one that vigorously searches for common ground. Read More…

This week in Alrroya, the United Arab Emirates (UAE) business and financial daily, I champion the beneficial role that media interviews can play in raising the profile of companies among the investment community and addressing malignant information asymmetry.

Most public company executives regard media interviews as a distraction. In their view, they would rather be running their companies. As far as they are concerned, there is a dichotomy between minding the store and talking about the store. Read More…

This week on Street Talking in NEXT, I discuss the importance of design in encouraging shareholders to actually want to study annual reports, which is indispensable if they are to understand the business environment, strategy and operations of companies enough to hold boards accountable.

Collecting annual reports is my pet passion. For Christmas, my partner gave me the 2009 edition of the Graphis Annual Report, a coffee-table worthy tome of report design, which I had long fantasized over. At my local post office, I have gained some notoriety for receiving cartons of annual reports from all around the world. I enjoy studying the layout, language, typography, colours, photography, illustrations and paper. At home, I have a room stacked to the ceiling with reports. Just looking at them in that rainbow array is as visually satisfying to me as any aficionado’s art collection. Read More…

In announcements on strategic actions, companies often present the singular act as sufficient cause for a boost in shareholder value. This week in Street Talking on NEXT, I argue that that is not enough. To enjoy a higher valuation, companies need to improve the information environment to give investors a clearer view on the business. Simply focusing on other companies that have enjoyed higher trading multiples consequent to such transactions misses the subsequent actions they took in ensuring that the markets had a better understanding of their value creating actions.

This week marks the second anniversary since Apple, the maker of iconic products, announced its entry into the mobile handset space with the iPhone. On the same day Steve Jobs, its CEO, demoed the phone at the January 2007 MacWorld Conference, the company changed its name from Apple Computer to simply Apple, Inc. The Cupertino, California-based company’s decision to excise ‘computer’ from its name was intended to reflect its transition from solely designing and making personal computing products with cult status to a broader portfolio of consumer electronics goods and services, including on-line distribution of music, home entertainment systems, digital audio players, cellphones, software and of course, computers with wider appeal outside its core geek demographic. Read More…

This week in Street Talking on NEXT, I discuss the critical role company websites can play  in closing the mispricing gap between stock prices and the underlying value of companies on the Nigerian Stock Exchange.

I am appalled at the failure of most companies on the Nigerian Stock Exchange (NSE) to utilize the web for investor engagement. In fact, about half of the companies on the NSE do not have any web presence at all. Among those that do, only a small number leverage the channel for investor communications despite the fact that a growing number of investors make decisions to buy, hold or sell stocks based on information they find on the Internet. If it is axiomatic that information is the lifeblood of markets, then company websites ought to be the most credible and authoritative sources for relevant, reliable and timely information. Read More…

This week in Street Talking on NEXT, I share my views on the probable preoccupations of shareholders and boards in the coming year.

As the year draws to an end, it is tempting to make prognostications for the coming year. If I had to identify the main trends contending for top spots on the investment community agenda in the coming year, I would forecast a rise in shareholder interest in corporate governance and heightened monitoring of capital structure evolution as it impacts the stakes of antecedent shareholders. My outlook is that passive shareholder acquiescence will be replaced by active participation in strategic decision-making, particularly among holders of non-negligible blocs of stock.

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Five years is more than enough time for companies to answer the ‘to be or not to be’ question on the attractiveness of a strategic proposition and then conclude it. Five years after merger talks began between First Bank of Nigeria and Ecobank, both banks are yet to bring the deal to a cloture. This week on NEXT, I point out that the main obstacle to progress may lie in a fundamental disagreement on strategy for a future resulting entity.

Mergers and acquisitions (M&A) are not trivial events. Synergy evaluation, regulatory hurdles, valuation disputes, internal and external claimsholders’ buy-in, advisory fees, integration factors, cultural issues, competitor objections, unsolicited offers and ego management are just some of the mid-air sharp knives that task the juggling skills of those driving a transaction. Little wonder that veteran investment bankers love to decorate their offices with commemorative Lucite tombstones (‘deal toys’) of consummated deals as testimonies of battlefield scars. Nurturing a deal from the first date until the dotted lines are signed demands superior matchmaking skills. Read More…

The past year has not been kind to investors on the Nigerian Stock Exchange. From the euphoria of 2007, the market has plumbed previously unimaginable lows. Typical of such U-turns of fate, everyone has denied responsibility for the roles they played in the descent to hell. For companies and investors, claiming to the victim numbs the pain. This week in NEXT, I use the extreme metaphor of the drug addict to show how investors allowed themselves to be seduced by the market highs and why companies, who arranged these fixes, encouraged the habit.

If the three Rs, namely reading, writing and ‘rithmetic are the foundation of basic learning in elementary school, for investors on the Nigerian Stock Exchange (NSE), the apposite Rs would be rancor, recrimination and regret. For them, intemperate, even if misconstrued, statements by the Central Bank governor, whatever the genuine intent, have only rubbed insult to injury. Today, blame and bitterness are their trademark sentiments. This is a tragic tale of an acid trip gone awry. Read More…

In Nigeria, shareholder associations enjoy a disproportionate amount of space in most media coverage of comments on company actions and performance.  Frequently, the attributed statements of these associations’ officers are overwhelmingly positive, irrespective of the actions or performance. This can give a misleading view that the companies have the full support of shareholders. No dissent, no critique, no balance. This week in Street Talking on NEXT, I recommend three credible alternative sources of information that the press should include in its reporting on company results and plans.

Reading news stories about company results and public offerings I often wonder if they are all written by the same writer. The titles all share an uncanny familiarity. ‘Investors tickled by Company A’s FY Results.’ ‘Company C tantalizes shareholders with x kobo dividend.’ ‘Shareholders overwhelmingly laud Company E’s planned bond sales.’ Read More…

At the best of times, most companies on the Nigerian Stock Exchange  put up a dismal performance at communicating with the investment community. The reverse in economic fortunes has exponentially amplified those failures. This week in Street Talking on NEXT I make a few recommendations for issuers on what they need to be telling investors at this time.

Bruce Wasserstein, the late chairman of Lazard, the storied investment bank and dealmaker extraordinaire, used to say that it was the lot of the corporate advisors to offer a lot of advice to companies for free, which can be a thankless task. The double facts that the counsel was valuable and free did not mean that the companies would take it. Companies are hard-wired to discount pro bono recommendations. Bearing the odds in mind, here are some suggestions to companies on the Nigerian Stock Exchange on keeping investors engaged through the recession. Actually, investors might also find them useful in judging companies. Read More…