EDITORIAL: IPO cancellations can only hit PROs

The last-minute cancellation of the Yell and Focus Wickes floats this week underlines the central problem for transaction-based PR consultants revealed in the latest Deal Watch table. In short, the size of deal is in decline. Large-scale M%26A work has virtually dried up and only low-grade IPOs are in view.

There are worrying implications in this for City PROs. As with investment bankers, lawyers and accountants - the advisers with whom financial PROs like to claim status parity - completion of the deal normally brings the biggest fee. Most firms will at least get paid for the hours put in, but they will not realise the full potential value of their labours.

And as this type of financial PR becomes less lucrative, it also becomes less inspiring to work on. Accounts take on a 'care and maintenance' feel, keeping markets warm so future plans are well received, rather than going full-out to win an argument with sceptical investors.

On the upside, while billion-pound floats are now scarce, there remains demand for smaller-scale IPOs - recent and forthcoming new issues include gaming business Gala and the less sexy but no less robust Intertek Testing Services and Intersola.

The City may conclude that this week's cancelled IPOs were promoted too heavily too early on - the first stories about VCs recouping their investment in Yell were a full six months ago. With so much time to scrutinise each company, by the time the shares make their debut, the market seems to have cooled.

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