Steinhoff Bankruptcy: The Risk of Big Personalities

Could you give us a quick summary of your key takeaways or what someone should understand about organisational structure and lessons from the Steinhoff story.

I think the biggest single take-away from all of this would be that businesses that don’t look like they’ve got fundamental synergies, shouldn’t be accepted at face value. In my view, the investment community and the media, as well, should have been far more skeptical about the real direction that Steinhoff was going in.

Is that just about going into detail?

I think it’s about greater analysis of the way in which they reported. I’ve forgotten their name now, the group of analysts who broke the story on Steinhoff. We weren’t actually sure where they came from.

It was Viceroy.

That’s the one. I think one of them transpired to be a Brit actually. But, they basically did this balance sheet analysis and said this doesn’t all add up and make sense. Hindsight is a fantastic way of assessing situations but if you did enough digging with the information that was available, one could have found that the group had significant issues overall. I suppose what one would also have seen was the characters and personalities.

Businesses which are run by single, bold, dominant characters, inevitably their personality is imposed on the business overall and therefore one should look at those businesses with more skepticism. Whether it’s Dunkerton at Superdry, Ashley, Ray Kelvin, Marcus Joost or Martin Sorell. They’re the ones that immediately come to mind. Any business which is dependent on one person and their personality represents a risk, particularly if those individuals then move on. Take Ashley out from their operation overall and you’d say, “What’s left?” Everybody just does his bidding. It looks like the same thing at WPP. It looks like Superdry is there. So that would be another take away for me: be skeptical.

Just on that point of businesses that don’t look like they have the synergies that they claim they do. How would you suggest we analyse that? Apart from asking for better reporting, would you describe it the way we have today in terms of looking at the sourcing strategies, the entities they acquire and how that evolves? Or are there any other questions that you would be posing?