Case Study: Fund raising and listing on AIM

Background:

This situation presented two objectives for the stakeholders in the company. Firstly the business was growing quickly and required further funds for investment in sales, marketing and product development. A number of business development ideas had been followed and this had created a large pull on resources required to deliver those initiatives. The early stage investors could not provide the resources to fund this expansion and were keen to exit their investment in favour of new investors who could.

Challenge:

The challenge firstly was to review and refine the business plan to clearly articulate the strategy of the company and to cost the development cycles being proposed. Only once this had been put in place could the company set about seeking a solution for its twin objectives of raising further finance and providing a possible exit for early stage investors.

Solutions:

By working with the senior management and board the business plan was refined and clear objectives set for future development. This included a revised assessment of the market opportunity and the way in which new initiatives were to be approached and funded.

At the same time advisers were sought to raise further funds and provide a potential exit route for early stage shareholders. Following consultation it was decided the best route to achieve this was to seek a listing on the Alternative Investment Market (AIM) by undergoing a reverse takeover of a listed shell company. This route provided a cost effective way of raising further funds for the company compared with attempting to create a new listing on AIM and making the shares publically tradeable.

The process of listing involved writing a prospectus, engaging with reporting accountants and legal advisers.

Benefits:

The company raised £2.5m through the process of listing on AIM and had a clearer business plan resulting in a major customer win some 2 years later based on that development. The early stage investors were able to trade their shares as a result of the company going public providing an exit if they wished to take that opportunity. The new investors did not want their cash going towards existing investors but into the growth of the company.

Case Study: Charles McKay