London Stock Exchange: Main Market
The advantages and considerations of joining the London Stock Exchange Main Market
Before you join the London Stock Exchange Main Market, you should consider the potential advantages, but you should also bear in mind the challenges your company will face.
Such a decision brings responsibilities as well as benefits. People at every level of your business - from board members to employees - must be ready to accept the disciplines inherent in having shares traded publicly.
Advantages of joining the Main Market
Joining the Main Market can bring a range of benefits to your company, including:
- access to capital which could help your company raise finance for further development, both at the time of admission and through further capital raisings
- an increased profile which can increase demand for your shares and improve your company's liquidity - some investors are more comfortable investing in a business listed on the Main Market as they may see it as being a more secure opportunity
- facilitation of acquisitions - increasing your company's ability to make acquisitions, using listed shares as currency
- objective valuation - placing an independent value on your company's business
- creating a market for your company's shares - helping to broaden your shareholder base
- improving employee commitment - you can use shares as an employee incentive to encourage their long-term motivation
Matters to consider
However, you should also carefully consider the potential issues involved in joining the Main Market, for example:
- Listing costs - the expense of joining a public market can be considerable, both at the time of admission and in ongoing costs. You will need to pay for the services of a range of advisers - including a reporting accountant, lawyer, investor relations and public relations.
- Market fluctuations - these can be caused by a range of external factors, including social, political and economic change, all of which can affect your company's share price - both positively and negatively.
- Compliance - as a publicly listed company you will need to comply (or explain why you do not comply) with the UK code on Corporate Governance.
You should carefully evaluate both the benefits and potential issues before joining the Main Market - see London Stock Exchange guidance on the Main Market.
Alternative sources of finance
If being listed on a stock market is not right for your company, you could consider other ways to raise finance. For example:
- private equity - either through a firm or individual such as a venture capitalist or business angel
- debt finance
- management or employee buy out
For further information see business financing options - an overview.