The big issue for strong profitable SMEs is they are not big enough to IPO but still need to access all the benefits of being a PLC. Until recently this was a major problem but now with the advent of Agglomeration a small profitable well-run SME can access the power of a PLC.
In essence it’s the opportunity for your business to be part of a Public Limited Company PLC without doing an IPO.
An Agglomeration in essence is a group of companies that team up together to create a big enough PLC to access the capital markets, but each company keeps its culture and way of doing things and every company works together to make the holding company PLC successful.
If your company has a net profit or over 500,000 Sterling per year you could qualify to be part of such an innovative new approach to connect small business with big capital and liquidity.
Very simply if you’re a small company with a million or more profit you apply to an Agglomeration to Join and if accepted you will swap your company shares for the value of your company for share in the holding PLC company.
The number one issue for small businesses is getting access to capital markets and this really hurts them when they come to sell their company. A good small company would be lucky to get 5 times their net profit as a valuation but someone like Apple could be as much as 20 times their net profit.
So, when you exchange your company shares for PLC shares, they are probably over time going to be more valuable than your own company shares.
Another major benefit is you might want to sell part of your company but keep the majority with this option you could sell 20% of your shares to do the things you have always wanted to but still keeping control of your company and it part in the group PLC.
If you have a business with a minimum of 500,000 Sterling net profit a year but not enough to launch an IPO, then this may well be the perfect option for you. I would suggest this is not a good option if you’re wanting to expand your business and get the power of a PLC behind you.