Dear MCG… Whisteblowing worry
Dear MCG, One of my portfolio companies has just paid off a potential whistle blower in a foreign plant. It’s unlikely the news would ever get out, but should I tell my LPs? And if so, how?
It’s true that LPs don’t want to hear everything going on in every portfolio company all of the time, but you must make sure they only ever hear bad news from you first.
Always, always, ALWAYS attempt to contact your investors by phone, if at all possible. The aim should be at least one phone call, followed up with an email.
It’s crucial that you sit down and formulate an action plan with your team before speaking to your LPs. Ideally, your plan should include details of how you are handling the situation, how you will handle the press and how you will ensure it doesn’t happen again. Communicate this to your LPs.
LPs want transparency and openness, and communicating this incident shows you are serious about being open and transparent, but, this doesn’t mean there won’t be repercussions. Expect press interest and prepare for a surge in IR communications to win back favour if the matter is serious.
Remember the golden rules. First, if it’s possible an LP could read something in the press, make sure it is old news by the time they see it. Second, be part of the solution, not the problem, by supporting the bodies investigating any breach or crime.