Floating Your Company

1. Why Float?

1.1 A float can provide an exit for existing investors who sell their shares as part of the flotation.

• Venture capitalists may want to realise their investment once the business has become more established.
• A founder may want to realise part or all of the value built up in the business.

1.2 A float can be used to raise capital for the company. New shares are often issued as part of the flotation.

• This can be the best form of financing for companies with volatile or low cashflow, or which already have substantial borrowings.

1.3 A float provides a mechanism for investors to trade shares.

• Shares which can be traded are more attractive to investors.
• The company's shareholder base can be widened, increasing the potential for raising future capital.

1.4 A float provides a market valuation for the company's shares.

• An initial float, offering a small percentage of the company's equity, may make it easier to sell further shares in the future.
• Key employees can see the value of shares or share options which they have been (or will be) granted.

1.5 A float can allow a company to use its shares as an acquisition currency.

• It may be possible to fund future acquisitions entirely or partly in shares.

1.6 A float helps increase a company's public profile and raises its status with customers and suppliers.