Delaying a listing until market conditions improve may well provide an opportunity to boost the value of your business.

Market volatility has kept many firms from listing. However, this may be just what is needed to ensure the groundwork is done to ensure longterm success.

Companies must remain focused on the two or three things that help them deliver profitable growth and exceptional shareholder returns. Maintaining a focus on the core disciplines of cash flow and returns on investment over a three- to five-year time frame is imperative. Continue to focus on the one or two key strategic drivers of value avoid getting distracted from the primary goal of realising the full potential of the core business. Do not let up on leveraging and sweating the equity.

There is a major risk in trying to do too much in too many areas as a result of frustration with a delayed listing; this may result in a loss of focus and consequent value destruction. Be patient; if the strategic plan leading up to listing is robust, eventually the value will be there to unlock.

If the business performs everyone will eventually get their reward. Failure to perform, however, demands action. Be prepared to take decisive steps if things do not go according to plan. If necessary, replace your management team.

Match risk with return. The key is to keep management motivated despite a delayed listing. It may be necessary to develop short-term incentives to complement the promise of sharing in the value of an eventual listing. Ensure incentives focus on a few measures, tailored to the goals of the business. Measure cash more closely than earnings; calculate return on invested capital rather than return on accounting capital employed or return on sales.

A delayed listing could turn out to be a blessing in disguise.

Bird is SA MD of global consultancy Bain.
Dec 09 2002 07:35:59:000AM Alan Bird Business Day 1st Edition