By Lucy Kenningham
Deal leaks are part of the City’s plumbing
A few days ago my firm, H/Advisors, published a survey about leaks, the financial information kind rather than plumbing mishaps. We analysed every deal in the world over $2bn last year, all 267 of them, and looked at which ones had been leaked into the media before they were officially announced.
The results are a testament to the tenacity of journalists (especially that one-man scoop machine Sky News City editor and City A.M. columnist Mark Kleinman) as well as the chatty habits of the deal community. In all, 35 per cent of all deals in the world leaked before their time, despite all the work done by regulators over the years to crack down on this. Some regions were leakier than others – notably Europe and the UK, where almost half of all the 60 deals in 2022 hit the media before they graced the RNS ticker. What are we to make of all this? Let’s be clear, this is no accident – accidental deal leaks almost never happen (although I did once, only once, read all about an interesting merger upside down in a train carriage weeks before it was announced, because the CFO was silly enough to read the papers in plain sight). In 99 per cent of cases people leak because they want the information to get out.
In the report we identified a number of categories of leak. These include, the Negotiation Leak, where one side wants to put the target ‘in play’ or a target wants to conjure up an auction. Then there is the Malicious Leak where a competitor might leak to scupper a deal. There is also the Relationship Leak, when someone wants to do a favour for an influential journalist. There is finally the Announcement Leak, a ‘day-before’ leak with the hope of favourable coverage.
Of course, the other question people asked is ‘who leaked’? Most times we will never know since both journalists and their sources are good at covering their tracks.
The real lesson is that all companies should prepare for when, not if, a deal they are working on might leak. And that we should all pay close attention to the financial media since it still has the ability to disrupt even the smoothest corporate plans.
Real reform needed
Pity poor our Chancellor Jeremy Hunt, forever trying to balance competing interests with very few resources. Last week’s grandly-titled Mansion House Reforms were a case in point. On the one hand he wants to boost pension returns; on the other he wants to stimulate the somnolent London Stock Exchange; on the other other hand he needs to ensure that the government still has ready buyers for the vast swathes of gilts it keeps issuing.
The result was an announcement that pension funds can henceforth invest up to five per cent in private assets. Two problems. One, the code is voluntary. Two, most well-run pension funds should be looking at that level of asset diversification anyway. So it appears to be another large announcement with rather less substance to it. The clue was in the press release – why did the Chancellor feel he had to quote no fewer than 17(!) financial and business luminaries supporting the proposal?
The problem with Mansion House
If the Chancellor really wants to make himself popular, he could consult with the Corporation of London on something that really does need reform – the Mansion House dinner itself.
Every year the Corporation corrals the good and the great into a black-tie dinner to listen to long speeches that have already been leaked and trailed in the media. And it’s held on a Monday evening. The whole thing feels distinctly 19th century when we are already almost a quarter of the way through the 21st.
If the City is really a modern financial centre, it should rethink the whole thing. Live stream it perhaps from a more relevant venue? Introduce an element of interactivity and make it less screamingly elitist? Nicholas Lyons, the current Lord mayor, is smart enough to recognise the dreary anachronism of it all.
Perhaps he will take action before his term ends.
A podcast with a point
Most business podcasts are cringeworthy and should be subtitled ‘why I am so successful’. David Senra’s Founders is different – the narrator gleans business lessons from an eclectic mix of historic and modern-day figures, from Napoleon to Walt Disney to Michael Jordan and James Cameron. It is like Forrest Gump’s box of chocolates – you never know what you are going to get.
