How to Float Your Company on the Stock Market
Floating a business on the market is not exactly a simple process. There are many things that can go wrong, and it won’t be the ideal solution for every business out there. It’s important to be fully informed before you go ahead with this kind of task. But if it offers a strong solution for your business, and you tread carefully, there is no reason why the process can’t work well.
What do we mean by floating a company though? It’s pretty simple to understand. When a company is floated on the market, the company issues shares to investors and the public. These shares are then traded on the stock exchange. There are many reasons for business owners wanting to do this. So, to find out more about it, read on now.
Decide Why You Want to Float the Company
Floating a business on the stock market is not something that should be done lightly. It should be something that is considered carefully before any action is taken. If this is done, it can be a real success. But you have to have a very good reason for wanting to do it in the first place. If you don’t have that reason, then it would be reckless to go ahead with it. So, think about why you are doing it.
There are many reasons why you might want to. For example, one of the most common reasons for businesses being floated is raining capital. When the business sells shares, it makes money. This money can then be used to fund and finances the projects that the business wants to undertake. This can then help the business to grow. That’s something that is good for the owner, but it’s also good for the investors who bought shares.
Know the Challenges Ahead
There are drawbacks of floating a business though. These don’t have to put you off taking on the challenge. But they should certainly be kept in mind when it comes to making the decisions. And if you do go ahead with your plans to float the business, you should be aware of all the challenges ahead. There will be many of them, and you can only deal with them when you know what exactly they are.
For a start, your control over the company is decreased when you sell shares. All the shareholders will have to have a say in the future direction of the business. So, make sure that you retain a high enough percentage to ensure that you remain in overall control. There can also be numerous hidden costs when you float a company, so you should be aware of these.
AIM vs. Main Market
There are two options when it comes to where you will float your business. For small businesses, the AIM can often be the more attractive prospect. This is because the costs are lower when the business is floated on the AIM rather than the Main Market. There are also lower requirements for businesses wanting to float here, which makes it appealing to some business owners.
The Stock Exchange Main Market is where the bigger businesses operate. For example, this price detailed review shows how Apple is performing on the Main Market. It can be good for small businesses too though. It has to have a stronger track record and be more established to be accepted here. But it can be easier to find investment once the business has been floated on the Main Market, so there are many things to consider.e
Fix the Accounts
You then need to think about how you will make sure that your business meets the criteria set out by the AIM or Main Market. If you fail to meet the relevant criteria, then your business simply can’t be floated. A bit part of the criteria that you’ll have to meet relates to your accounts. There are a set of accounting principles that you will have to pass in order to be able to float your business.
Many business owners hire accountants to make sure that the business’s accounts are in order before floating. This is the smart way to do it if you think that your accounts are not quite as sharp and in order as they should be. The legal structure of the business will also be scrutinised, so make sure those kinds of issues are taken care of too.
Speak to Stockbrokers
Getting the right advice from people who know what they’re talking about is vital. This can make a huge difference when you’re trying to float your business. It’s not something that you can afford to ignore if you want to make a success of your efforts. The most important person to speak to is a stockbroker. They will be able to give you the help and support you really need.
When the business is eventually floated, they will be the ones who help you to attract investors. Without them, it becomes much more difficult to find people willing to buy your company’s shares. They can also manage the profile of the brand once the business has been floated on the stock market. They will also help you when it comes to setting the price at which you will sell the shares.
Start the Process of Floating the Company
When you are ready to actually float the business, you should put someone in charge of the process. This could be someone who already works for the business. Or it could be an external professional. Whichever option you choose, it should be someone who is experienced in floating businesses on the stock market.
You will also have to create a prospectus. This will help to sell the shares. Investors want to be able to get as much information about a business as possible before they buy shares in it. The prospectus should help them to get this information. Therefore, it needs to present the business in the most positive way possible and show why it’s a good investment proposition.