Citing ‘Credibility’ Issue, Underwriter Drops Coverage Of CTpartners

January 25, 2015 – Chicago-based William Blair & Company, lead underwriter for CTPartners, has downgraded the company’s stock and abruptly dropped its coverage of the global executive search firm. Blair’s relationship with CTPartners dates back to December 2010 when it acted as lead manager for CTPartners’ initial public offering. At the time, Blair analyst, Tim McHugh, said that ‘CTPartners represents an attractive small cap investment opportunity.’ Analyst McHugh cited the company’s ‘global scale,’ ‘experienced management team,’ and fewer off-limits client problems because of its small size as compared to larger rivals. A month after the IPO, William Blair & Company initiated research coverage on CTPartners, giving the company an ‘Outperform rating and Aggressive growth company profile.’ Four years on, analyst McHugh now cites in a just-released report certain ‘credibility’ issues the company must now grapple with, based on ‘negative media headlines,' which could significantly weaken CTPartners’ ability to remain a quality growth stock. Those headlines, alleging promiscuous activity and sexual impropriety among the senior management ranks at CTPartners, "have made the company an increasingly unfavorable investment opportunity," said Scott A. Scanlon, HSZ Media editor-in-chief. A damning sexual discrimination complaint filed with the Equal Employment Opportunity Commission (EEOC) is said to be under review, with a negotiated settlement likely. But recent forecasting from CTPartners suggests its management team, headed by CEO Brian Sullivan, is distracted: $1 million in ‘unexpected expenses’ surfaced late in its fourth quarter. This failure to provide better guidance of its performance, coupled with recent bad publicity – all at a time when the company was planning to sell stock recently, led the Blair team to opt out on its coverage of CTPartners altogether. CTPartners' stock is trading down 40 percent on the news.

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