CPP Group - floating on AIM
For many entrepreneurs, selling a business is the high point in the process from start-up to early retirement. Once the calf has been suitably fattened, they take it to market, sell to the highest bidder and sit back on the proceeds, preferably sipping something sweet in the sunshine for the rest of their days.
But not all business owners are the same, and many opt for MBOs to family successors or staff to ensure that the blood, sweat and tears they’ve poured in over the years leads to continued success.
Alternatively, this type of entrepreneur may find that selling a business is not the right option to secure the future of their hard-fought success story. One such company is CPP Group, the York-based provider of life assistance products, which announced its intention to make an initial public stock offering (IPO) on the Alternative Investment Market (AIM) in February 2010.
Hamish Ogston, who founded the business in 1980, handed the reigns over to his business and has spent the last decade as non-executive chairman, until his replacement in this role in January 2010. Eric Woolley, the group CEO, explains that Ogston’s decreasing role in day-to-day operations was a major factor in the decision to float.
He said: “We’re not going to raise a large amount of money, we’re not seeing the IPO exclusively as a fundraising exercise for the company. We’re 30 years old and we’re still owned pretty much outright by the founding shareholder, and he has been a non-executive for over ten years and he’s now in his early 60s.
“So what the IPO is a natural progression from private status to public ownership allowing the existing shareholder to reduce his holding and we’re taking the opportunity at the same time to raise a small amount of primary to allow us to reduce our debt.”
Although there is an inherent risk with flotation, CPP Group has experienced three years of progressive revenue and EBITDA growth, and directors felt the timing was right. “It’s driven by the company’s own needs,” said Woolley. “Picking a particular time with regards to market conditions is never straightforward because it takes a long time to prepare for flotation. So we took a view that it was the right thing for the company. At the moment the markets are a little bit up and down, but essentially it’s the right timing for the business.”
