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Is A Flotation Right For My Business

Access to capital, liquidity and enhanced credibility through an IPO can support future growth and value creation for companies.

Despite current volatility across the World’s stock markets and concerns  in the UK regarding the Brexit process the opportunity to float remains for companies across the UK and beyond. Over my 14 years with the London  Stock  Exchange the ‘IPO Window’ some- times felt like it opened and closed with regularity. However, ambitious, successful businesses can always consider a flotation as part of their wider growth and exit strategy. For owners of successful private and private equity backed companies a flotation on a stock exchange  can be a good way to realise some of their value, raise funds and increase the company’s profile. In the UK we benefit from having both AIM and the Main Market of the London Stock Exchange, which are great platforms for smaller growing businesses right through to large multinational corporations, to raise equity funding through an Initial Public Offering (IPO).

IPOs can provide businesses with access to capital and an investor base that can be approached when further capital is required, often in accelerated timeframes. Furthermore, being a listed company may often mean other funding options can be sourced on more competitive terms than available to private companies.

As an exit strategy for shareholders, a listing can have the benefit of allowing the sale of shares to be staggered, with some shares sold at IPO and some sold later. Public company valuations tend to be higher than those of a privately-owned business and therefore shareholders can benefit from this arbitrage alongside supporting M&A activity.

Additionally, being quoted can help increase credibility with customers and suppliers, especially those overseas, and with a much broader set of stakeholders.

An IPO will generate a significant workload for a management team and require many decisions to be made. Appointing an experienced and independent financial adviser can help in many ways, for example:

Helping in selecting an appropriate sponsor or nominated adviser for an IPO candidate

Providing rigorous preparation, especially around the business plan and financial forecasts

Deciding which stock market is most suited to the company

Identifying and recruiting the right independent non-executive directors

Preparing the management team and rehearsing to present to City institutions

Rickitt Mitchell has advised management teams and shareholders on a range of IPOs, with valuations ranging from £20m to £500m+, for clients such as; Van Elle Group plc, Flybe plc, Styles & Wood plc, NCC Group plc, Telecity plc, Instem plc and BNN Technologies plc.

Our approach is to help management teams and shareholders navigate through the process and make sure they get the right advice to meet their objectives and deliver a successful IPO.

— Mark Fahy & Neil Mitchell | Insider Magazine

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06.02.19