Case study

Floating on the stock market

Preparing our business for flotation - Lighthouse Group Plc

Sumus (now Lighthouse Group Plc), a Bristol-based independent financial advice company with 160 employees, raised £3 million by floating on the Alternative Investment Market (AIM). Here, group chief executive, Allan Rosengren, explains why it was the right option for the business and how they managed the process.

What we did

Consider our options

"We first started thinking about floating in 2000, because we wanted to raise the capital to acquire other businesses and expand our group. Unfortunately, around that time, the stock market crashed and it meant the conditions were no longer favourable.

"In October 2004, we decided the time was right. It took a further four months to get everything in place and Sumus plc was admitted to AIM on 17 February 2005 at 40p a share."

Ensure the company was ready

"Before floating on any stock market you have to ensure the company is in a strong position - in profit and with a credible track record. We researched our options very carefully and decided AIM would be the best option for us because of our size and the plans we have for growing our business."

Select the right team

"Once you have decided to float you need to select brokers, nominated advisers, corporate finance specialists, solicitors to the company and to the placing, reporting accountants and registrars. We chose advisers who were Bristol-based, except our broker who is in London, and employed the services of the very best people we could afford. Floating on the stock market is certainly not a cheap option - it can cost anything up to £1m depending on how much you are looking to raise. Trying to save a few thousand pounds on your advisers can be a false economy. If you are going to do it, you want to make sure you get it right.

"From the company, three executive board members were put in charge of the float. That was myself, our operations director and financial director. In the four months it took to get admitted to AIM we each spent anything between 30 to 100 per cent of our working week on it.

"In terms of the business benefits, the float obviously enabled us to raise the money we were looking for, but there are many other positive factors. As a listed company you are more likely to get PR and be thought of as more credible than a privately owned company. Businesses seeking a strong partner or looking to merge with us are also more likely to approach us directly now as they will know we have the funds and capabilities to complete a transaction."

What I'd do differently

"If we'd had more control over the conditions, and we had identified what we wanted to do sooner, it would have been beneficial to have floated in 1999. However, at that time our turnover was only £4m, so we probably wouldn't have been large enough at that stage."

Note - As of 2 May 2008 Sumus Plc changed status to Sumus Ltd. On 6 May 2008 Sumus Plc and Lighthouse Group Plc merged to create the largest autonomous listed independent financial advice/wealth management group in the UK. The enlarged group now trades as Lighthouse Group Plc.