Antony Gifford Consultant for the Business Development team at Hardman and Co caught up with DirectorsTalk to discuss his recent article ‘The Capital Cycle of a Growth Company’
Q1: Now Antony, you’ve just written an article on the capital cycle of a growth company, what made you write this article?
A1: So the article came out of a discussion we had at Hardman really, we were talking about how as we help companies with capital and growth. Different companies’ approach it in different ways and perhaps more importantly some have a better handle on what is required than others and we thought we’d try and put the whole discussion we were having down on paper and share it with people.
Q2: Surely though, all investors want the same thing from a company?
A2: I think that’s a very common assumption and the simple answer is no that’s not the case, investors have very different requirements and it’s very important that a company, before it goes out to pitch and to try and find new investors, appreciates that. For example, you can have investors who only want aggressive growth companies with very high prospective returns but are comfortable in seeking those returns to take significant risk and then you have other investors, perhaps, typically looking at more mature companies who have an income requirement or a much lower risk tolerance. One of the purposes of writing the article was to make sure that a management team, before they go to market for capitalising or to pitch to new investors, considers the kind of investor they’re looking for and that not all investors are the same.
Q3: Now your articles touches on how companies need to add advisors as they grow, why is this important?
A3: I think it follows on from your previous question really that investors in bigger companies or with lower risk tolerances, investors who typically look at listed companies rather than private companies, have higher expectations for the management team and for the, if you like, public face of the company that they might choose to invest in. So a company, as it grows and matures, needs to remember that and needs to add those crucial extra layers of advice so the management teams are prepared ready for the next kind of investment if you like and don’t come over as ill-prepared, naive or simply find themselves pitching to the wrong kind of investor or with the wrong preparation for the kind of investor they are meeting. At its simplest, clearly listed companies need advisors that private companies don’t need but all the way through this progression, this life cycle that we refer to, if you look at the tail end in the article you can see that we’ve tried to add advisors as you move through and just to highlight to make management teams think ‘who might we need’, ‘what help might we need for the next kind of investor we’re looking for’.
Q4: How do Hardman and Co fit in when they’re looking at this subject?
A4: So Hardman and Co are fairly unique but our basic and core skill is connecting companies with investors, the core product if you like is research, written research, our research reaches far more investors than a typically brokerage firm for example. So if you look at small listed company, maybe on AIM, we recently sent one of our reports out to 20,000 investors, and they were 20,000 investors that we’d selected from a wider distribution list, a typical broker firm’s research would go to maybe 400 investors who are clients of that brokerage firm. So very different reach, we can reach the private investor with £10,000/£20,000 to put into investment all the way up to the larger investors, the big institutions like Blackrock and JP Morgan and the likes and so we can help a company at many more stages of this life cycle than most firms that are writing research and giving advice, we can help them to reach very different pools of different potential new investors.
Q5: Will there be any further reports?
A5: That’s obviously the plan, we call it ‘The Gifford Report’, the intention is every 3 or 4 months to pick a topic like this that we think our clients and our readership are interested in. What the next one is, well you’ll have to wait and see but the intention in certainly to make a series out of this.