The Advisory Board, Executives Face Securities Class Action

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The Advisory Board Company and two top executives are facing claims that they misled investors regarding the success of their acquisition of Royall & Company. The Advisory Board announced the transaction in December 2014 and predicted the new business would yield between $125 million to $130 million in revenue in 2015, according to the complaint. The plaintiff claims that after the acquisition was completed, however, the defendants failed to disclose to investors that there had been “severe integration problems” and that Royall would be unable to meet their projections. Royall’s CEO and CFO had allegedly resigned sooner than expected, and the new company was unable to “recognize revenue” on certain contracts because, as a public company, it was now required to close its books sooner than it had to as a private company. As a result, Royall did not perform or grow as expected, causing the defendants a net loss of $101.8 million in the fourth quarter of 2015, the suit says.

Upon this news, Advisory Board’s stock price reportedly fell 21 percent, causing stockholders significant damage.