MMSI looks for new ways of raising cash

Finance boutique hired to explore options
Firms plans piggy-back strategy

By Paul Rogerson

A Scottish consultancy firm planning a partial flotation is seeking alternative ways of raising the money it wants to fuel expansion plans.

With the IPO market in the doldrums, Marketing Management Services International (MMSI) has hired the corporate finance boutique Alan Malcolm & Co to explore other options.

"Ideally, we're looking for one person or institution who could come up with this money", said Gerald Michaluk, the managing director of the strategic marketing consultancy.

One hurdle facing the Glasgow firm is the gulf between its turnover and the cash injection it is seeking. Mr Michaluk said it would be another year before the firm's revenues hit a level it may need to reach before institutions would consider pumping in ten times that amount in investment capital.

However, MMSI's flotation plans are not dead. Mr Michaluk is considering floating 20%-30% of the business on the Alternative Investment Market (Aim). "We're keeping our options open a bit longer", he said.

The firm's strategy is to "piggy-back" on the anticipated flotation this year of Accenture, formerly Anderson Consulting. "As soon as they go, we'll go", said Mr Michaluk. "The only thing we won't have done is talk to the analysts".

Some listed consultancies have struggled to attract investor interest because revenues in the industry are project-related and therefore highly volatile. "We will let Accenture convince the institutions that consultancy is a sector in which they should have a portfolio", said Mr Michaluk.

Consultancies of all sizes face a huge challenge in attracting and retaining scarce talent and want to be able to offer share option to staff. They also need capital to invest in the technology required for expansion.

MMSI has set aside 10% of its stock for staff share options and hopes to lure consultants culled by downsizing at bigger firms.

On 1 May, the firm will split in two. MMSI plc will be set up as the vehicle for a possible flotation. MMS Ltd will remain as a property holding company.

MMSI specialises in gathering marketing intelligence for a client list that includes several of the world's top 500 companies. Founded 13 years ago, it now employs 23 full-time and 150 part-time staff.

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© Marketing Management Services International 2011