Over and above this enhanced public awareness, much of the attraction is financial. Listing creates a market for your company’s shares, allowing you to diversify your equity base. Existing share holders will have a ready means of realising their investments and equity holders will enjoy increased liquidity. Listing introduces access to additional funding and creates multiple financing opportunities, which are often necessary to help fund growth strategies and ambitions of future expansion and even acquisitions. Finally, listing provides the option of implementing share option schemes for your employees, either as a reward system or as a means of attracting and retaining quality management and staff.
The advantages are inviting, but are tempered by a number of challenges that need to be carefully considered before taking the plunge. Listing essentially makes a company accountable to public shareholders, introducing incredible pressure to maintain growth and profit trends. When following a public offering, some of the control of the company might have to be relinquished – which is extremely difficult for a management team that has been accustomed to autonomy.
One of the biggest impacts on your business, and one often poorly considered, will be information management. A number of rules and regulations suddenly become non-negotiable, and will have to be strictly adhered to by governing bodies for transparency purposes. This demands a much higher level of reporting that your business may or may not be able to deliver with its current systems. For smaller companies looking to list, this could pose its own set of challenges in relation to legislation and governance.
Investors make informed, educated decisions about where and how to invest their capital, and may weigh up a multitude of factors such as financial stability, appetite for risk, financial performance, sound governance, proven track record and so on; but ultimately their decision hinges upon two things:
· Can this company offer me the confidence that they are capable custodians of my investment?
· Can I be assured that the company operates with appropriate due diligence so that my investment will not only be secure, but will grow as the business grows and generates a return on my investment?
If your business (and more specifically your business information) cannot satisfy these requirements, it is unlikely to attract investors, making listing a wasted exercise. This is why a company’s ERP solution plays such a significant role. The right ERP solution will enable you to create the right level of reporting standards, which are fully integrated across the business, extremely accurate, transparent and in as real time as possible. Proven integrity of company information and the evidence of repeatable best practice will corroborate your position as an appropriate vehicle for investment.
Secondly, the deep functionality, integration and automation of processes and checks and balances created through work flow based architectures force a business to continually adhere to best practices, introducing higher levels of control. This will naturally support good corporate governance and makes compliance with laws pertaining to the stock exchange easier.
With confidence such a key factor one must consider the effect that the right technology partner will have on your business, particularly if your investors are foreign, promising as investment in Africa may be, investors are inherently wary of unfamiliar territory and the risks associated with this. If you are considering gaining global investors, you will need a well recognised brand such as SAP.
Deploying a reputable information system with a proven track record will help alleviate concerns around security, continuity and information integrity. Like going public, an ERP investment is a long term investment even if the return on Investment might not show up immediately.
By Conrad Steyn, Director of Barnstone Consulting