Helping companies to list on the exchange is one of the major sources of revenue for the financial advisory community. It is not in the same league as merger and acquisitions activity as an excuse for exorbitant fees, but it is a useful money-spinner.
Obviously the disruption of the past 18 months has taken its toll on the initial public offering (IPO) market, as the process is known. Ultimately a listing is all about selling shares and in troubled times people would rather hold on to their cash. But as confidence returns, we see the first brave souls coming out of the shadows.
The PR firms involved earn their money. For a start, at a time like this no-one can be sure if the desire to invest exists, so they have to suck it and see. Then even if conditions look good when the process starts, it can be derailed by market shocks that could not have been predicted. This means there is always the danger that like the grand old Duke of York, you march potential buyers up to the top of the hill, only to find sentiment has changed and you have to march them down again.
The other challenge is that no-one is honest about the process. Almost all the PR effort goes into introducing the management to the opinion formers - journalists and analysts - to generate coverage about the business. But while they may successfully paint a picture of an attractive growing business, this is only half the story. The other half is the price at which the vendors are looking to sell. If the business is overpriced, it should be avoided no matter how attractive it is.
Unfortunately, in times like these, most vendors are private equity houses. The private equity house wants to get rid of the shares and move on and does not really care if it stuffs the end investor. In contrast, the PR firm will soon be back talking to the same journalists, analysts and institutions about another client and does not want to meet a legacy of resentment. PR consultants have a serious interest in trying to curb the greed of vendors and investment banks. It is no surprise they frequently fail. But they make a mistake when they don't even try.
- Anthony Hilton is City commentator on London's Evening Standard