John Linton
I had an exploratory meeting (via teleconference) with the M and A people from our lawyers yesterday to determine whether Exetel was at a stage where it could be successfully listed on the ASX. The meeting was initiated by me to get some real feeling as to what the options were for Exetel in the event that we decided we would invest much more heavily in the hardware and processes that are currently being considered.
It took a while to cut through the disclaimers and their opposite hype but the net of what appeared to be said was that they could probably find a buyer for Exetel at a price that was acceptable to Exetel's directors within six months (and perhaps a lot quicker than that) and that they could arrange for a public listing before 31/12/08 providing a surprisingly long list of events/targets were achieved over the coming twelve months.
So far so good - after almost an hour - both parties said goodbye and went back to whatever the meaningful work for the day was.
When I took some time to review what was going to be required, and the likely costs of carrying it out (and realising that I was probably being hopelessly optimistic about what the costs would really be), I'm of the current opinion that far too much time and effort is required by already severely busy people to achieve even an 18 month away target date. Just to do what would be required of me would mean that the time I need to do what I do on a day to day basis would be severely compromised which would mean that the various growth and financial targets necessary for a public listing would almost certainly not be met.
Catch 22.
I'll give it some real thought over the weekend and determine a rough schedule and time allocation to meet the objectives that are deemed to be necessary but it underlines to me just how easy it is to run a privately owned company with a very tight shareholding compared to doing exactly the same thing as a public company. The costs of the reporting and other infrastructures alone would halve the current profit and deliver no meaningful extra benefit to the operation of the business - in any way.
I think, if my initial thoughts are correct, what it really means is that despite the M and A advice about how possible it is to do the reality is that a small ISP, at this stage of its business 'life' is not a suitable vehicle for a public float and the advice is more based on the fee earning opportunity than a truly well considered analysis of what is really likely.
If that proves to be the case after more consideration it will be a great relief in most ways because I really wouldn't like to be making decisions on large expenditures given my true uncertainties about what the situation will be in 18 months time. I suppose its a sign of encroaching age that, for the first time in my life, I'm looking for reasons not to take the hard options and to look to easier solutions.