Gearing up for AIM’s revival
At a time when entrepreneurs were disillusioned with the impact of AIM, we look at one company that is preparing to float...
Entrepreneurs are unimpressed by the performance of AIM at the moment, which is currently in decline. However, Paul Yates of the P81 Group is expecting a revival and is gearing his business up to impress investors in 2011.
Paul Yates has started the year on a positive note with the amalgamation of two businesses that now form the basis of his P81 Group. The business has the funds in place for a growth strategy and is looking to grow both organically and by acquisition over the next two years. This, so the plan goes, will culminate in a float on the stock market.
Yates founded his first business, internet marketing firm Just Search, in 2004, which he later sold to Swedish firm Getupdated for £14m. He remains a shareholder in the company but has now moved into a new area of marketing, along with brother Justin. Yates is impressed by the potential of ‘starter packs’ which are given to new members at gymnasiums and sports centres. The packs, containing items such as towels, water bottles and bags, add value to the membership and cost the club relatively little when bought in bulk. They are also handy promotional tools, printed with the club’s branding and logos. The business is scalable and offers a foothold into a market with many opportunities for future sales.
During 2007, Yates had been keeping tabs on another business, Promotions 81, and he bought a stake in it after selling Just Search. He upped this to a controlling share last September and also bought the assets of a digital print business. In February, the two businesses were brought under the P81 Group umbrella and a £750,000 cash injection means the company is now set to grow. Further acquisitions are planned, services are to be brought in-house, and Yates expects that this will raise the overall value of the business for future shareholders. “We will shift the strategy of this business that currently spends more than £250,000 a year outsourcing into one that effectively manufacturers in-house, as this will help the group’s P/E value. Then we will focus on developing the team and driving up sales,” he says.
The business already has customers such as David Lloyd, Esporta, LA Fitness and Virgin on its books. But now P81 is looking to expand its sales to include a range of clients, including local authorities and hotels. Yates expects to be creating around 15 new jobs at the 30-strong company, and that turnover will more than double over the next two years. The final part of the plan is a flotation, with AIM a possibility. “The journey begins with a business that currently turns over £3m and employs 30 people to one that will turn over between £6m to £8m and be highly profitable by the time we float in 2011,” he says.
AIM listings have plummeted from around 1,700 to below the 1,500 mark, as new companies fail to replace those that leave. But Yates is not concerned. In fact, he’s confident that the stock markets will have recovered by the time he is ready to float. “I’d like to go to a full listing, but it is probably more likely to be AIM.”