Taking our firm to market

The highlight of taking a stock exchange listing was appearing on TV in an interview with CNBC, the financial news channel, says Steve Driver, head of the Driver Group. “There was no run through the questions, they just sat me down at this big table and started counting down the seconds to when we would be live on air. I couldn’t believe the attention we were getting. At the other end of this table they had the chairman of Lloyds TSB.”

But it’s not that hard to see why the small dispute resolution firm attracted attention when it floated last month. Driver reckons he performed well on TV, which sounds fair. The Lancastrian has a disarmingly honest air about him but manages to exude a mix of confidence and modesty that suggests his enthusiasm for his firm is genuine. This is less predictable considering that Driver did not found the firm. He joined it 15 years ago and was in fact the only board member to vote against rebranding the company with his name in 2001. The firm was founded in 1978 and is based in Rossendale, Lancashire.

The attention must have also stemmed from the fact that it is a bit of an anomaly to see a construction and property consultant floating, let alone on the Alternative Investment Market (AIM), the exchange for up and coming companies. Rival dispute resolution specialist Knowles listed on the exchange in 1998 but the company’s chairman Roger Knowles admits it was an unusual move. “People in this business tend to be partnerships and they can never get all the partners to agree to a listing”, he says.

For the Driver Group, the process of deciding to become a publicly listed company was “like a game of chess”, says Steve Driver.

“As part of our business plan we needed to achieve certain objectives and strategic moves. It became clear that to get where we wanted we would need to list.”

Since floating on 13 October the firm has raised £2m. The group, a roughly 70-strong outfit with a turnover of £7.5m, plans to use the cash to fund an ambitious bid for growth.

Plans include an acquisition, staff hires, expansion into both the project management business and the UAE, and setting up an office in the South West.

The AIM listing seems to have worked out for Knowles. The firm announced a turnover of £30.2m in its year-end results for the 12 months to 31 July and pre-tax profits before exceptional items of £534,000. Turnover was down £1m but this year the 450-strong firm is expecting to bounce back with a £32m turnover.

They just sat me down at this big table and started counting down the seconds to when we would be live on air

Steve Driver, head of the Driver Group

Knowles says the decision to float was about getting money into the business quickly, offering staff better career opportunities and injecting more discipline into the firm.

“As a public company you are expected to make profit forecasts and then you have to work hard to get there. Private companies can be more relaxed,” he says.

Listing is not an easy option, however, says Driver. It took 12 gruelling months to prepare. “It’s a very strict process,” he says. “We started by reading numerous business text books and I think our advisers were impressed with how much the management team knew about the listing process.”

The team was working 15-hour days, seven days a week just to keep the business running as it had been. Driver says that since he still gets involved personally in the day to day business of resolving disputes there was no let up in pressure: “You’re dealing with the broker, the financial public relations firm, lawyers and investors. This is continuous.”

The first step was to meet with a nominated adviser, the stockbroker WH Ireland, which described itself to Driver as a “friendly policeman”. The adviser is chosen from a list approved by AIM’s parent company the London Stock Exchange. It has a duty to the LSE to ensure that firms are suitable and ready to list.

Driver worked with WH Ireland on the onerous task of creating the admission document, the information that all potential investors read before deciding whether to buy shares. “It’s the story of the company, the vital statistics, business plan, past performance and so on, and everything in it needs to be legally verified,” Driver explains.

Driver says in its document that it works for six of the top ten contractors. To prove it the firm had to show lawyers a list of the top ten builders in QS News’ sister magazine Building as well as letters of intent from the contractors. “I even had to hand over my birth certificate and copies of my qualifications,” says Driver.

People in this business tend to be partnerships and they can never get all the partners to agree to a listing

Roger Knowles, chairman, Knowles

“It’s to protect you as much as anything though,” he adds, pointing to the risks faced by the company and to the group directors.

Driver also had to assist the company’s lawyer in carrying out legal due diligence as well the accountant combing the books on behalf of WH Ireland.

Meanwhile, he had to appoint two non-executive directors. AIM requires each of its stocks to have a number of non-executive directors in order to uphold standards of corporate governance. Driver chose David Clements, a former director of Atkins, and Michael Davis, an accounting consultant.

The group hired financial PR firm Biddicks to stage-manage its approach to the media – both national and investor press. There was also a round of interviews with investors, ranging from large institutions such as pension schemes and fund managers to brokers acting on behalf of individuals. Driver had 30 of such meetings in the two weeks before floating. “It was hard to keep explaining the same things and look enthusiastic,” he says.

“I asked why we shouldn’t get in touch with fund managers months before the listing but apparently they’re only interested in immediate opportunities.”

Investors have taken to the firm so far.

The £2m was raised through placing 2,739,727 new ordinary shares. The shares were originally priced at 73p and had already gone up to 75p at the time of writing.

Post flotation, Driver says that beyond changing his job title to chief executive life hasn’t changed much. “I still spend a lot of time trying to avoid and resolve disputes. We like to think of ourselves as peacekeepers.”