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Considering flotation?


Deciding whether to float your company on a stock market is an important decision. Most successful privately-owned companies will eventually reach a stage in their development where they consider whether the next natural step is to join a public market.

Joining one of the London Stock Exchange's markets provides your company with the opportunity to benefit from improved access to capital, increased global profile and access to liquidity.

The decision to float your company on a public market is a significant one, involving many personal and professional considerations.

When deciding whether your company is at the right stage for flotation, there are a number of questions that need to be addressed. These can broadly be split into questions for the management team, and questions for your adviser team.

Management questions

  • Does your company have a clear strategy and business plan?
  • Is the structure of the board suitable and robust?
  • Are the members of the management team prepared for the greater disclosure, openness and accountability that investors and the market require following flotation?
  • Is the management team ready to invest the time and effort to get your company ready for flotation?
  • Is the current structure of your company appropriate for life as a publicly traded company?

 Adviser questions

  • Do the directors of the company understand what investors expect and require from them?
  • Is the timing right for the flotation, both for the company and in terms of market conditions?
  • Does the company have a robust trading record and is it saleable to the market?
  • Are the operational, financial and management information systems robust enough for life as a quoted company?
  • Have the directors taken account of best practice on corporate governance?
  • Are there any strategic initiatives, such as acquisitions, that need to be completed before flotation?

The advisers you appoint all play their part in making sure your company satisfies the rules and regulations and meets the market’s expectations.

Public companies have to adhere to certain rules and regulations, which differ according to the market your company joins, and also have to meet accepted standards of corporate governance.

You will need to persuade investors – in London and around the world – of the qualities of your company and its prospects, so that they will be prepared to invest in your company and ensure the success of your flotation. You will need to demonstrate that the business is soundly managed, that you have a robust business plan and that the management has the right skills and commitment.

To make sure that a flotation is the right step both for you and your company, there are five main questions you need to ask:

  • What are the benefits of joining a public equity market?
  • Is your company ready to float?
  • Which is the right market for you?
  • Which method of flotation should you seek?
  • What type of security do you want to admit to the market?
 

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