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The challenges for entrepreneurial businesses that are considering an IPO

The ‘Where Next for Growth Companies & Equity Markets?’ seminar addressed the big challenges that face entrepreneurs and growing companies considering an IPO.

The latest Corporate Finance Faculty ‘Financing Entrepreneurship’ seminar, held on 6 April 2011 at SJ Berwin’s London offices, attracted a full house. ‘Where Next for Growth Companies & Equity Markets?’ was chaired by SJ Berwin corporate partner Delphine Currie. A range of speakers explored the demands and rewards of being listed, what is needed from listed company advisers and, critically, what the appetite is for IPOs.

Last year saw a minor resurgence in IPOs after 2009 when, for the large part, funds raised were secondary issues, a minority backing up a growth story.

SJ Berwin corporate partner Will Holder said he expected to see private equity taking strategic stakes in UK-listed companies, allowing them to ‘kick the tyres’ of potential takeovers. Guy Peters, corporate finance managing director at Seymour Pierce, outlined what the firm behind last year’s successful SuperGroup flotation looks for in an IPO: ‘Going public is only viable for businesses run by entrepreneurs.’

Next up was the colourful co-head of pan-European small and mid-cap team at Schroders, Andy Brough, who warned about the need to price an IPO right: ‘Everybody needs to leave the party with a balloon. If you have a party and you take all the balloons, you might find that at the next party you are on your own and there are no balloons.’

ASOS plc international director Jon Kamaluddin emphasised the need for a healthy shareholder register: ‘You get the children you deserve and that is the same with shareholders.’

And Michael Higgins, non-executive chairman of Ebiquity plc, senior adviser at KPMG and board member of the Quoted Companies Alliance, provided insight into what a listed company looks for from its advisers: ‘I always want an adviser who would be prepared to say no to me.”

This article first appeared as 'To float or not to float' in Corporate Financier, magazine of the ICAEW Corporate Finance Faculty , in March 2011.