Why would Matt and Simon take the business private?
They would need to borrow money to buy out the remaining shareholders, then they would have lenders to please, who would have a much bigger voice than a bunch of small fry equity investors.
Being on a capital market allows them to issue equity should they want to raise for growth of acquisition. It allows them to issue share based compensation to attract employees with no question of what a fair value is. not to mention unhappy employees who have recently been issued shares at bargain basement prices...
The costs to list are millions, money that would be lost if they go private, assuming that they won't incur more costs as the insto holders who bought at $1.40 seek to get a return.
They would suffer reputational damage, both for being unable to deliver shareholder value on market, and for failing those insto investors who bought higher - and if they lose access to markets they would want plenty of friends in the financial institutions to support off-market debt or equity, not ex-investors who had their fingers burnt.
In other words, why did they IPO at all if they wanted to be a private company?
And inversely, what does it bring them to go private? A lighter regulatory environment, but they would need to do a lot of the disclosure stuff anyway for their Escrow financial dealer licensing. Less media exposure, as the drum beat of earnings releases disappears.
Questions over Matt and Simon's personal finances, when they no longer have a marked to market asset like an 80% shareholding in a $200m company.
A little relief from a downward sloping chart staring at them everyday, I guess, but I suggest the current lows are unjustified if market growth has returned as indicated in the forward looking metrics in the last quarterly, and removing the chance to see that upward change would be a negative for business morale.
The series of small buys from Simon and Matt is purely to indicate their faith in the business. I haven't run the numbers, but have they purchased back even half of one percent of the business? I don't think so, with little $10k and $30k nibbles.
We will see at the AGM, but I think it extremely unlikely they have any intention of going private.
FLN Price at posting:
42.0¢ Sentiment: Buy Disclosure: Held
