Belfast Telegraph

Andor showed that flotation can be a more lucrative option for local firms

There has been much discussion about the pros and cons of flotations as opposed to trade sales. Proponents of trade sales will say that an IPO is not an exit as you cannot sell your shareholding at an agreed price as with a trade sale. They will also tell you that the scrutiny that goes with being publicly listed and accountable to external shareholders is very challenging.

They are absolutely right on both counts – in an IPO you are likely only to be able to sell a small proportion of your shareholding initially, and the scrutiny and accountability that follows a flotation is indeed not for the faint hearted.

I have been involved with two IPOs during my career, Trafficmaster plc and Andor Technology plc – in both cases the companies flourished and the shareholders did extremely well out of the exercise.

In the case of Andor Technology, the founders and ourselves at Crescent passed on the opportunity to sell the business back in 2004 when it had sales of around £11m, profits of £1m and a value that would have realised no more than £20m or so in a trade sale. Instead, it floated on AIM at 90p per share in 2004 (sadly, the last Northern Ireland-based business to have done so) and using £4.5m of capital from the public markets (plus £3m more at a later stage), built the turnover to £55m and to profits of £7.4m at the time of it sale to Oxford Instruments plc earlier this year.

Ten years on, Oxford paid £176m in cash to buy the company, or £5.25 per share for those same shares that were worth 90p in 2004.

You can do the maths. It certainly shows that flotation, in the long run, can be a far more lucrative option. It has been the same story at First Derivatives and BCO Technologies.

It's just a pity that more Northern Ireland based businesses have not yet followed their footsteps. But I am sure some will – there are several companies with sound potential approaching the same choices as Andor in 2004. I am sure that some will take the more challenging road, but the road that will turn out to be far more profitable in the long run.

Colin Walsh is CEO Of Crescent Capital, a former chairman of Andor plc and chairman of the CBI in Northern Ireland

Belfast Telegraph

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