This all comes after a difficult yr for the CBI, together with allegations of sexual misconduct , and a poisonous office atmosphere, by present and former staff.
The potential Make UK tie-up raises fascinating questions round managing reputational dangers in company transactions, particularly the place model and identify recognition characterize an necessary a part of the attraction to potential companions or purchasers.
Prior to their troubles, the CBI’s public profile was outstanding and its views shared extensively. In specific, it had a robust public voice within the aftermath of the Brexit vote, and subsequent nationwide debate on the form of the UK’s relationship with the EU. However, after public allegations had been made earlier this yr, the CBI has skilled quite a few troubles, each reputational and, reportedly, monetary, as members cancelled or suspended their memberships.
How, then, would Make UK assess and handle the potential contagion danger to its model, if a partnership or merger materialises?
Firstly, Make UK will seemingly wish to perform intensive due diligence – lifting up the CBI’s company ‘bonnet’ and looking at what types of points could also be lurking. Are claims being made by present or former staff, arising out of prior inappropriate behaviour? Are people related to or employed by the CBI more likely to face additional investigation? Is there substance behind such allegations, and have they been taken critically by the organisation? What steps are being taken to make sure related points don’t come up once more (resembling adjustments to governance?) In the company world of mergers & acquisitions, it’s key for potential companions or purchasers to know these dangers as early as potential, and it’s seemingly that Make UK will try this right here.
Secondly, as soon as dangers have been recognized and investigated, what ought to Make UK’s plan be to deal with any unfavourable PR dangers to them on account of participating with the CBI? One key problem shall be how they clarify to key stakeholders – staff, members, suppliers – the potential advantages of any preparations. Will the advantages outweigh the potential dangers to Make UK’s personal model?
Another key problem could be assessing whether or not a re-brand of any merged entity could be efficient. Or would individuals have the ability to be part of the dots, rendering any re-brand pointless or unhelpful? We only in the near past noticed Twitter rebrand to ‘X’ – will that re-brand do something to attract again customers when the model remains to be closely linked to unhealthy press surrounding Musk’s takeover and adjustments to the enterprise? It’s maybe nonetheless too early say, however an fascinating query to contemplate within the case of each X and the CBI.
Thirdly, may a deal be structured in order that authorized legal responsibility related to the CBI stays ringfenced, enabling Make UK to soak up the ‘positive’ components with out taking up extra dangers? Whilst these types of structuring issues are commonplace in company M&A transactions, there would seemingly be questions on how efficient any options is perhaps in isolating or eliminating associated reputational points.
The company world offers fascinating examples of how reputational points might be navigated (or not).
Corporate historical past suggests some reputational toxicity is deadly. The Weinstein Company, for instance – beforehand a profitable unbiased movie studio – was unable to extricate itself from monetary and reputational harm associated to its affiliation with its eponymous founder, and the intense allegations in opposition to him. Note although that the corporate’s chapter introduced alternative, with Lantern Entertainment buying the vast majority of its property and movie library in 2018, seemingly bypassing unfavourable affiliation with Weinstein himself.
It will definitely be fascinating to see how talks develop between the CBI and Make UK, particularly because the CBI’s monetary troubles imply {that a} answer appears to be required sooner slightly than later.
The backside line is that this – sure, a merger may work. But any deal goes to require very cautious balancing on either side. With the quantity of public scrutiny the CBI and a possible deal are below, negotiations may very nicely collapse within the occasion of a misstep.
Hamish Perry, Partner, and Mike Barrington, Senior Associate are within the company crew of regulation agency Charles Russell Speechlys
