Trust, but Verify

In my line of work, I hear too many sad stories from professionals. The one common theme – professionals feel like someone at their current company lied to them.

In a recent Future Workplace survey, less than half of U.S. HR professionals and hiring managers said their company was “extremely” or “very” transparent. Abby* recently ran into her company’s fog.

Abby lost out on a promotion to Mark to lead sales of a larger division. When she asked why – the company said the new role was too big of a jump from the size of Abby’s current book of business. Abby accepted the decision and went back to work. About a month later, a colleague, with access to the company’s financials, told Abby the company had lied to her. The division Mark ran was smaller than Abby’s group. That day, Abby started looking for her next gig.

It’s easy to see where the company failed its team, but Abby didn’t know where she failed herself. Information about the size of Mark’s business was readily available, because he joined the company through an acquisition. Abby just didn’t look in the right places.

I’m using a recent acquisition by XO Group with similar facts to illustrate.

• On September 13th, XO Group announced its purchase of How He Asked, including in the press release that the “terms of the acquisition will not be disclosed.”
• On November 3rd, XO Group filed its quarterly report with the government and said it paid $1.5 million for How He Asked (wrong choice of press release verbs by XO Group!)**

Once you know the acquisition price, professionals can make an educated guess about the division’s revenues.

Many experts say your house is your biggest financial decision. Not so! Where you work is your biggest financial decision – don’t short yourself on doing the research.

What to remember:
1. A company press release is not the story it is required to tell. It’s the story the company wants to tell;
2. Look for original sources of data, because reporters rarely revisit old stories and update for follow-on information; and
3. Trust is earned.

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This post is the first in a series on acquisition disclosures and accounting and how it can help professionals and job seekers.

* All names have been changed in this blog post and XO Group is not the company where Abby and Mark work.

** If the company did not disclose the acquisition price in the text of the filing, professionals can look at the net cash provided or used in investing activities and the footnotes to the cash flow statement.