S4Capital’s share price headed sharply downwards this morning following a good kicking in the influential UK Sunday Times yesterday (subscription required.)
‘How chaotic accounting engulfed Sir Masrtin Sorrell’s S4 Capital empire’ was the headline, referring to the essentially book-keeping problems that led auditor PWC to refuse to sign off S4’s accounts on two occasions (they’re now out there.) Sorrell himself has admitted the accounting issues are “embarrassing” and has promised to beef up S4’s finance department.
Just as damaging were the suggestions that Sorrell is still obsessed by seeking revenge on WPP – the company he founded and which kicked him out – and that MediaMonks, now the umbrella brand for S4’s activities, was modelling itself on fabled ad series Mad Men.
S4 has yet to respond and, doubtless, is talking to its lawyers as Sorrell is unlikely to take this lying down. Current and prospective clients will obviously be rattled as, clearly, are shareholders. S4’s value has more than halved since the accounting saga began.
Fast-growing companies – and S4/MediaMonks has certainly been the most acquisitive in the ad space over its almost four years in existence – often suffer growing pains. But, this spat aside, S4/MediaMonks now has to show it has other arrows in its quiver aside from a bulging cheque book. It has to deliver for its extensive client list for a start, notably BMW which it won a year or so ago.