Britam versus Acorn and Cytonn: What You Need to Know

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November 13, 2014

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Photo credit: Zoomwalls

Photo credit: Zoomwalls

Anyone with a finger on the pulse of Kenya’s corporate world has by now seen the drama, intrigue and surprise developments that have come with the white collar battle between major financial services player Britam and Acorn Group, a real estate developer, alongside plucky upstart, Cytonn, a newly set up private equity fund. What began as a hostile takeover attempt by Britam has quickly devolved into a series of power plays worthy of its own TV series, with twists and turns that are as entertaining as they are informative for the rest of us in the business world, including us in logistics. We also welcome those researching the subject so as to have an opinion on social media; this is what corporate blogs are for.

The first and most crucial lesson here would be to be ware of your approach in business. The saga began when Britam, one of the key real estate financiers of Acorn expressed a desire to own controlling stake in Acorn. With Acorn unwilling to cede this ground, Britam opted to starve them of funds needed to push forward various Acorn development projects, in violation of their shareholding agreement. While strong-arming your way through a disagreement can be a viable business strategy at times, in this case it was the catalyst that began chain of events that have so far included the multi-billion shilling showdown playing out in the courts. This approach saw four key Britam executives from their property division resign and form their own fledgling firm, the aforementioned Cytonn, to take over the deal with Acorn that Britam would have financed.

While in theory a well executed coup, this departure of four top level employees brings us to our next lesson: have your house in order. That such senior staff could blindside a company of this magnitude is not uncommon, but it is a sign of a disconnect between employees and the company as an entity, including corporate goals. Shortly after their departure, Britam filed a motion to stay the Cytonn partnership with Acorn, citing that funds being used by Cytonn were actually fraudulently transferred from Britam kitties. Before your company is put in a position of trying to recover an allegedly misappropriated KES.3.9 billion lumpsum, thought to have been taken by the high level executives you trust to run your company, it can be said that you need to put more effort in ensuring everyone’s goals and needs align with those of your corporate body; and to keep a closer eye on your money.

Photo credit: Tnooz

Photo credit: Tnooz


Our third lesson comes from the wake of the confrontation: always remember there will be consequences. While we could focus on the financial loss and departure of employees as a consequence in itself, there have been other implications. Business websites and publications have aired this story in excruciating detail, painting a negative light on Britam as the instigator in this scenario and generally giving all involved a bad name. More tangibly, Britam’s share prices have faced a decline due to the implosion of their relationship with Acorn and therefore the loss of key lucrative projects that would have attracted investors’ eyes – not to mention that no savvy shareholder would be interested in owning part of a company tied up in an exceedingly costly legal quagmire.

Finally, we must look at this from the fledgling Cytonn’s perspective. Having spotted an opportunity that had been missed or underutilized by the more established firm, these four Britam employees set out to live the capitalist dream by, well, capitalizing on the gap. Whether the funds used to back Cytonn’s partnership with Acorn were embezzled or not is for the courts to decide, but what we as logistics professionals can take away from the situation is that as a new business you must have thick skin. Most if not all of us will have competitors who have been in the game longer, have more financial muscle, greater connections and can make life difficult for us even as individuals: some of the original Cytonn Four found themselves guests of the Kenya Police Force after they were arrested on Friday afternoon, to be released in the wee hours of the next morning. As an entrepreneur, you may not face adversity on this level but there will be challenges that you must either meet head on to see your dream realized, or quit and leave the path clear for those with the fortitude to do so.

Whichever party comes out on top at the end of this standoff, one thing remains clear: the intrigues of corporate maneouvering can have simple beginnings but escalate into a full on war with far reaching casualties. Unlike our fellow armchair analysts, we do not claim to discern which participant in this is on the right, nor can we say we could have navigated this managerial minefield any better than anyone else. All we can do is watch keenly from the sidelines and, as we have just done, try to gleen whatever lessons we can on how to conduct ourselves as corporate bodies and employees. Wishing you all a pleasant week with minimal internal ‘coups’ ahead.


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