Listing pays off for ambitious staffing companies - City Comment
5 December 2013
“TELL ME WHAT’S GOING ON!” A fortnight ago the Staffline share price had fallen by 60p during one morning and one of my largest shareholders thought I should know why. Of course I didn’t, in the same way that I never seem to pick the Grand National winner either.
Thu, 5 Dec 2013 | By Andy Hogarth, chief executive officer, Staffline Group“TELL ME WHAT’S GOING ON!”
A fortnight ago the Staffline share price had fallen by 60p during one morning and one of my largest shareholders thought I should know why. Of course I didn’t, in the same way that I never seem to pick the Grand National winner either.
Only 0.1% of our shares had changed hands yet the price had fallen by 10% and he was holding me directly responsible. Who’d want to run a public company?
As well as this type of call, I spend an average of a day a week on City stuff, meeting actual or potential shareholders, brokers, analysts, PR people – all time that could be well spent with customers. Then we spend a fortune on listing and advisory fees, higher audit and legal fees. So is it all worth it?
There is, of course, lots of upside. Clients, especially those who are also public, treat us with more respect (and give us business) because they know we have to run our financial and other systems to a much higher standard because we are public.
We have been able to offer many of our staff meaningful share option benefits, and have been able to plan for growth and a long-term future as an independent business, since the founding shareholders don’t have to look to sell the business in order to be able to retire; they ensure they have good succession planning and then can simply sell some or all their shares in the market. This has meant that we have attracted some of the best talent in our sectors, which in turn allows us to grow more, and so the virtuous circle goes on.
Being accountable to so many shareholders and having to meet with them every six months is hard work but has significant benefits as well; a lot of our best ideas for growth have come out of those conversations. As a private company CEO I would never have had the opportunity to meet with investment and hedge fund managers to find out what’s happening in many other industries and capitalise on that knowledge. We are far less reliant on banks for funding, especially at the moment; we can raise capital for organic growth or acquisitions quickly and simply.
Of course public markets aren’t for everyone. You must communicate constantly and honestly with shareholders, and there have been a couple of high profile failures in recent times, but these are far outweighed by the successes such as SThree and Matchtech.
If you have a good sized, well run and specialist recruitment business looking to grow significantly in the next few years, and are prepared to work hard at explaining why investors should support you, now is a great time to go public. If the City likes you, there is a wall of money to support you!
A fortnight ago the Staffline share price had fallen by 60p during one morning and one of my largest shareholders thought I should know why. Of course I didn’t, in the same way that I never seem to pick the Grand National winner either.
Only 0.1% of our shares had changed hands yet the price had fallen by 10% and he was holding me directly responsible. Who’d want to run a public company?
As well as this type of call, I spend an average of a day a week on City stuff, meeting actual or potential shareholders, brokers, analysts, PR people – all time that could be well spent with customers. Then we spend a fortune on listing and advisory fees, higher audit and legal fees. So is it all worth it?
There is, of course, lots of upside. Clients, especially those who are also public, treat us with more respect (and give us business) because they know we have to run our financial and other systems to a much higher standard because we are public.
We have been able to offer many of our staff meaningful share option benefits, and have been able to plan for growth and a long-term future as an independent business, since the founding shareholders don’t have to look to sell the business in order to be able to retire; they ensure they have good succession planning and then can simply sell some or all their shares in the market. This has meant that we have attracted some of the best talent in our sectors, which in turn allows us to grow more, and so the virtuous circle goes on.
Being accountable to so many shareholders and having to meet with them every six months is hard work but has significant benefits as well; a lot of our best ideas for growth have come out of those conversations. As a private company CEO I would never have had the opportunity to meet with investment and hedge fund managers to find out what’s happening in many other industries and capitalise on that knowledge. We are far less reliant on banks for funding, especially at the moment; we can raise capital for organic growth or acquisitions quickly and simply.
Of course public markets aren’t for everyone. You must communicate constantly and honestly with shareholders, and there have been a couple of high profile failures in recent times, but these are far outweighed by the successes such as SThree and Matchtech.
If you have a good sized, well run and specialist recruitment business looking to grow significantly in the next few years, and are prepared to work hard at explaining why investors should support you, now is a great time to go public. If the City likes you, there is a wall of money to support you!
