Why 'going public' paid dividends and why more should do likewise
The sale of Andor plc to Oxford Instruments will be 2014's first major corporate deal. It will also mean Northern Ireland has one less listed company, leaving it with just two – UTV Media plc and First Derivatives plc.
CBI chairman Colin Walsh – who is also chairman of Andor, and chief executive of venture capital firm Crescent Capital – discusses whether we should bemoan Northern Ireland's lack of listed firms:
As CEO of Crescent Capital, I would say that I have for a long time believed that we should have more listed companies here. Andor was in fact the last locally-owned company to go public (in 2004) and while the critical mass needed to do that has been higher over recent years, more companies could certainly have done it pre-2008, and it would not have been impossible since then either.
By any relative measure, our stock of listed plcs is way off-base. We cannot blame the ones that have listed and are subsequently being sold – the finger surely needs to be pointed at those choosing not to step up and go public in the first place, who elect to sell their business earlier in a trade sale instead.
People cite the scrutiny they will be placed under and the challenges of dealing with the City as impediments to going public. In that regard, Andor is an exemplar of why businesses should consider the IPO route very carefully indeed. Floated in 2004 at a market cap of less than £20m, it is now being acquired by a larger group for £176m. Going public enabled the business to grow rapidly, from less than 150 employees and revenues of around £11m, to the current level of over 400 employees and revenues of over £55m.
Going public enabled this to be achieved using the money raised from the public markets instead of incurring debt. Going public enabled management to concentrate on a growth strategy and growing shareholder value as opposed to managing its borrowings.
So, while I lament the further reduction of our plc base, being acquired at this point is not the end of the road for Andor; far from it. It's just the end of the beginning.