How does floating affect my business?
The reason many companies choose to float is to raise capital. With this windfall (having deducted the costs of floating), you can take your business forward – a business which now has the kudos of being a public company.
In return for these benefits, your business will never be quite the same again. You will be faced with a different way of managing your business, and some individuals deal better with this change than others. Suddenly, you’re answerable to shareholders when previously you had sole decision-making responsibility. Some see this as a loss of control – however, the shared skills of your new Board can be a valuable asset.
And yes, there’ll be more admin and regulations. Your business has to be absolutely water-tight legally and financially, and your accounts will need to be robust. As the name suggests, information about your company will be public and there for all to scrutinise. But on the whole, it’s nothing that a high quality management team can’t manage.
For your team, there’s the chance to become shareholders, and if you manage this well, it can be a great incentive. Shares can be a powerful addition to an employment offer package.
What are the financial impacts of floating my business?
This is the reason many people decide to float their companies: the financial benefit. It’s a great way of raising cash which in turn can help your business grow.
However, first ask yourself if your business can afford it. You need to have professionals on board for the flotation process. There will be ongoing costs for some of these professionals as you will need to retain their services. Other expenses include insurance, admission fees, and commission. Plus, if your business depends on your own input, factor in time away from your daily work.
If you can afford the initial costs, and have budgeted for the ongoing costs, then this could be an opportunity to raise capital.
Am I personally ready to float my company?
As a business person, your work life and your personal life are likely to be intertwined. Therefore, before embarking on a change which affects your business, you need to consider the impact it will have on you personally as well.
Now you’re listed, you have a Board and shareholders to answer to, and after time spent as “the boss”, this isn’t always easy. The shareholders may not always agree with you. It will mean a lot of hard work and increased responsibility, and more “i dotting” than maybe you’ve been used to. If you established your company because you like to be in control and to work flexibly, this may not be the route for you.
But, you will be CEO of a public company. Floating can be excellent PR, and really raises a company’s profile and perceived status – and yours with it. If you feel ready for this role, it’s an exciting move.
Are you ready to float?
If you’ve considered these three areas, and you feel that the balance is in favour of the positive points, then you may be ready to float your business.
At Panmure, we’re here to assist you throughout the process, even during this early stage. If floating isn’t the right option for you just yet, or if you’d like to explore other routes, we’re available to advise and guide. Please contact Patric Johnson.