When is the best time to float your business?
To float or not to float? That may be the question, but in reality, when to float might be the more important aspect. And, as with all the big questions, there is no black and white answer, largely because much of it is out of your control. It's down to markets, economic cycles - and often - pure luck.
While every company wants to come to the market when it can maximise its valuation, market sentiment can swing quite widely from one day to the next. The equity markets may be having a boom (a 'bull' market) when you first begin planning but may be on a downward spiral (a 'bear' market) by the time your plans are coming to fruition. Sectors that are everyone's favourite one-day, may be viewed as the dog's dinner the next. Timing is crucial for the best valuation, but, even professional advisers cannot always accurately predict what the market is going to do next.
One major aspect of going public is having the right board in place from the outset. Without a strong board, without high calibre people managing the finances and acting as non-executives, a public listing will be unlikely. Investors will want to see a strong team in place, one that can be trusted to deliver on the promises it is making and one that can deliver the returns potential investors expect. Following on from this, it is important that the company has full and up-to-date management accounts, proving the track record and overall business competence. Might sound obvious, but it is.
Looking to the future
Any company floating on the stock market will expect to have about their person, or thereabouts, a comprehensive business plan that outlines a clear message about how you will grow a public company. Not a scrap of A4 paper, not a few pages stapled together, but a solid, well-researched business plan
that shows the City, and potential investors, that you are someone who knows what he or she is doing, that you intend to grow the business, that this is the way you plan to do it and that you can do it. The bottom line for investors is the bottom line. If they invest in you, will they make money? And if they do, how quickly?
I've been there
"The time to raise money is when you don't need it," says Duncan Soukup, executive chairman of Thalassa Energy, an oil services company that floated on AIM on July 29, 2008, having raised £3.1m. "Trying to raise money when you need it is like trying to catch a cab when it's raining; it's nearly impossible. Just ask the banks with exposure to sub-prime."
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