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A company life map - the rise and fall of a hot stock

Introduction| Course| 609

1. Country Bumpkin - the early days

Country Bumpkin is founded in 1986 by Maureen Rooney, an Edinburgh housewife. Selling a wide range of garden seeds by mail order, she advertises in specialist magazines and builds up a profitable niche business.

Gradually, Maureen expands the CB range from seeds to gardening tools, craft products and clothing, and she also takes it into the retail market. Turnover increases year on year, and by 1991 the business is employing 22 people, with 4 retail stores in the Edinburgh area.

In 1993, the company has a cash flow crisis. Maureen steps back from day-to-day management to make way for her son Alan, who quickly implements three initiatives:

1. He tightens up cash control and installs new financial management systems.
2. He raises money from outside shareholders (private individuals known to the family) to ease the cash problem. The company remains a private limited company but the Rooney family's holding is reduced to 40%.
3. He uses the new equity to refurbish the stores, and makes plans to roll out 10 larger Country Bumpkin shops over the next 24 months.

Alan executes his business plan and by 1995, the company has 16 shops in the North of England and Scotland.

+ On the plus side, consumer interest in gardening is growing rapidly, with 'celebrity gardeners' on television every night of the week. With its strong brand and good products, CB is well positioned to benefit from this trend.

- On the minus side, the company has no presence in the affluent South of England, supermarkets are beginning to sell gardening products, and other better financed competitors are eyeing up the market.

Alan faces the same decision as many other managers of profitable private companies. Does he go for growth by listing on the stock exchange, or does he keep the company private?

1. Country Bumpkin - the early days 2. The decision to go public 3. AIM flotation by a placing of new shares 4. AIM flotation by an offer for sale 5. AIM flotation by tender offer 6. AIM flotation by introduction 7. First day of public trading on AIM 8. A growth strategy 9. End of lock-in period 10. The acquisition trail 11. Rights issue 12. Scrip issue 13. Preliminary results announced 14. Full results announced 15. Rumours of a deal - clarifying announcement 16. Takeover of rival - cash and shares deal 17. Convertible loan stock 18. Preparation for the main market 19. Admission to the main market 20. Move into FTSE 250 21. Share split 22. Share buyback 23. Director sells shares 24. New York-led collapse of tech stocks 25. Suspension of shares 26. Hostile bid for Country Bumpkin 27. Liquidation

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