London Stock Exchange: New Research Says That 80 Per Cent Of Recent IPOs Have Been Successful, Despite Difficult Market Conditions

An extensive new survey of companies that floated on the London Stock Exchange between July 2001 and November 2002 has revealed that 80 per cent of those questioned felt that their original objectives for achieving a flotation have been met. This is despite the continued fall in global stock markets during this period.

The report, entitled 'Going Public 2', has been produced by law firm Eversheds in partnership with the London Stock Exchange. It demonstrates that IPOs remain an effective method for raising capital and 77 per cent of the companies surveyed said they were happy with the valuation they received.

The London Stock Exchange and Eversheds believe that companies seeking to go public this year or in the near future could learn from the advice and experiences outlined in the report.

Evidence suggests that IPO candidates should start preparing as soon as possible; according to the survey those companies aiming for a Main Market float began preparing thirteen months ahead on average, while those planning to float on AIM took an average of six months to prepare.

Companies highlighted seven points they saw as being key to a trouble-free flotation. By following these steps, companies are putting themselves in a stronger position to achieve their IPO objectives:

• Be aware of your business plan and viability
• Understand the full costs involved
• Choose your advisers carefully
• Ensure that you have sufficient management time to devote to the demands of the process. Twenty-one per cent of companies underestimated the workload involved
• Be ready in advance and be prepared for verification of listing documents
• Continue to spend management time running and growing the business. Almost 30 per cent of respondents found the flotation process very disruptive to their day-to-day operations
• Ensure you can carry on trading regardless of whether you achieve flotation.

The role of non-executive directors (NEDs) was also highlighted. Sixty-eight per cent of companies appointed new NEDs in advance of the float, and 60 per cent of companies with NEDs said that they were important to the float's success. A further 81 per cent of respondents believe their NEDs have made an important contribution since the flotation.

Neil Matthews, Corporate Partner at Eversheds, commented: "Last year was a very challenging one for many companies seeking to float, while 2003 promises to be even more so. That is why it is vital that any company contemplating this move does their homework. The results from this survey have demonstrated that an IPO is an effective means of raising money to fund expansion.

"This survey allowed companies that floated recently to highlight what worked and what didn't. By taking these issues into account, private companies looking to float this year or in 2004 are more likely to reach a successful outcome. Of those companies we surveyed, 13 per cent said that an unsuccessful float would have resulted in their business folding."

Philip Mastriforte, Head of Issuer Services at the London Stock Exchange, added: "Companies clearly value going public in order to raise long term capital and increase their visibility, and the level of satisfaction highlighted in this survey is encouraging. Although market conditions have been tough, companies still continue to join our markets, and others considering the same move will find some useful tips and pointers in this survey."