Putting PR gloss on a serious loss

Buying shares in businesses whose main assets go up and down in the lift every day is always going to be a risky affair. There is an argument that people businesses like Shandwick should not be quoted companies at all. Yesterday's defection by four of the company's financial PR subsidiary's 13-strong board, principally because they felt frustrated at their lack of equity participation in Shandwick's success, underscored the point. The shares tumbled 10 per cent on the leak.

Shandwick, of course, took the blow in its stride, its fluent patter barely missing a beat as it painted a happy picture of amicable departures, smooth transitions, supportive clients. It's only five out of 100 hardworking staff, the gloss went. We wish them well.

The fact remains, however, that Shandwick has lost five of its most senior staff and it will be powerless to keep those clients who choose to move with the people who handled their accounts. Contractual obligations are not worth the paper they are printed on in these situations. No one can stop a client moving agency if it feels so inclined.

Whether it is chutzpah or pure stupidity which has led the founders of The Hogarth Partnership to name their new company after the painter of gin-swilling depravity remains to be seen. Given that they plan to launch their new venture on April Fool's day, there's a strong temptation to think the latter. They must also be hoping a new PR venture is not the clearest imaginable sign of the top of the market. When soon-to-be- floated Citigate staged a similar walk-out at the high tide of the 1980s boom, it faced a long haul through the recession before its founders could even start to think about cashing in their chips.