Fundraising for growth: IPO vs. Private Equity Presented by Debbie Clarke, Partner, Chantrey Vellacott, DFK LLP 23 September 2014

cvdfk.com Contents  Options for Development Capital  IPO vs. Private Equity  Private Equity market returns & Case Study  Are the Public Markets back?  Public Market Case Study 2

cvdfk.com Options for Development Capital 3 Newsflash 2014: Funding is available for growth Funding Solutions Bank Debt Private Equity Private Bond Public Equity (IPO)

cvdfk.com Options for Development Capital 4 Focus on Private Equity and IPO Funding Solutions Bank Debt Private Equity Private Bond Public Equity (IPO)

cvdfk.com IPO vs. Private Equity (Pros and Cons) IPO  Pros  Public exposure (marketing)  Generate new investors (capital raising)  Cons  Public exposure (always in the public glare)  Compliance (increased costs) 5 Private Equity  Pros  Funding flexibility (capital raising)  Board support (growth)  Cons  3rd Party Involvement (additional stakeholders)  Possible loss of control (investor position)

cvdfk.com IPO vs. Private Equity (Preparation and Documentation) 6  Identify suitable advisers  Early adoption of IFRS  Corporate governance review

cvdfk.com IPO vs. Private Equity (Preparation and Documentation) 7 IPO  Prospectus (published)  Long Form (private)  Short Form (published)  Working Capital Report (private)  Financial Reporting Procedures (private) Private Equity  Financial forecasts (private)  Business plan (private)  Share purchase agreement (private)  Investment agreement (private)  Identify suitable advisers  Early adoption of IFRS  Corporate governance review

cvdfk.com Private Equity returns 8  PE backed companies showing YoY increase in EBITDA, growth in employment and decrease in leverage  BVCA: 5-year IRR (2013) for surveyed funds covered was 11.1%, UK pension fund assets of 10.1% & FTSE All-Share of 14.3%  Corporate Venture Capital, UK lagging behind US and Europe UK private equity returns 15.7% over last decade

cvdfk.com Case Study – Ministry of Cake 9  150 years experience of manufacturing high quality desserts (producing over a million slices of cake a week).  From:  Private acquisitive company; to  Large corporate subsidiary; to  Private again with support of LDC

cvdfk.com Are the Public Markets are back ? 10  Focus on AIM  Average market capitalisation £68.1m (median £22.1m)  £4.16bn raised to July 2014, 113% of 2013 full year  Most money raised in last 7 years  Can AIM reach 2004 levels?

cvdfk.com Widest range of sectors on AIM 11  New AIM companies in 2014

cvdfk.com When to go to the market 12  Markets are still volatile and investor appetite changes 3 year FTSE AIM All Share

cvdfk.com No one wants to have to buck a trend 13 Patisserie Holdings Boohoo.com Epwin Group

cvdfk.com Case Study – Patisserie Holdings Plc  Grew from 8 stores in 2006 to 138  Significant growth forecast through further sites and brand acquisitions 14 Founded 1926 PE backed (2001) Acquisition spree: * Druckers (2007) * Baker & Spice (2009) * Flour Power City Bakery (2013) *Philpotts (2014) IPO on AIM (Jan 2014)

cvdfk.com 15 Conclusion  Options for funding: availability strongest for last 8 years  Private and Public Equity markets provide different options for growing companies  Prepare type of growth and funding required  Should you remain private or benefit from public market exposure?