Credible leaders are needed for successful IPOs
This article originally appeared on Drapersonline.com on 8 May 2014
Since the start of the year we have seen the largest wave of initial public offerings (IPO) and mergers and acquisitions activity since the crash. More importantly, a significant proportion of these have been in retail. There have been winners and losers, but all of them have had the right chairman and figurehead to bring the business to market.
So what makes a good chairman? In the case of retail I would argue credibility, credibility, credibility. Fashion is fun, but can be an erratic business; what can be a success one year can quickly lose its way. When a business relies so much on brand, emotional connection, passion and affinity with the product, it can be harder to value those organisations subjectively. Both Sir Stuart Rose (chairman of Fat Face, among others) and Peter Williams (founder of Jack Wills) have delivered success both in executive and non-executive roles and know how to maximise both company and shareholder value. Their understanding of the expectations of City institutions means they can bridge that gap.
Since the IPO of Debenhams, the city has been nervous about private equity ‘bearing gifts’. At 80p this week, Debenhams’ share price is still nowhere near its 2006 195p float price and has left a sour taste in many City institution mouths. Once bitten twice shy, the current raft of IPOs have needed to work even harder with the City to list successfully. The credibility of the chairman will have a massive impact on this process.
Bonmarché and Fat Face are examples of businesses that had previously lost their way. Acquisition by private equity and the hiring of the right team of turnaround experts has led to a successful outcome.
The right combination of investor, chief executive and chairman derives value.
The City is a fickle beast, therefore trust, strength of relationships and credibility will win over. In fashion the right chairman will create the perfect link between a subjective and emotional product and customer base, and the very rational and logical City fund manager.
If you’re interested in discussing roles in fashion at executive level, please don’t hesitate to get in touch.