Typically, such businesses are family-run operations. Like any other enterprise, they need access to finance to sustain and grow their operations, and continue to generate employment and value for all stakeholders. In reality, however, small businesses find it difficult to access alternative sources of finance and tend to rely primarily on bank finance, family funds, and their own retained earnings. Such constraints severely limit their potential and the greater role they could play in growing the economy.

The 'risk capital' which fuels the growth and expansion of larger businesses is simply not available to SMEs, which thus face a ‘financing gap’. While entrepreneurial owners are the dynamos that keep SMEs going, such people have little time for financial planning and moreover, their ability to provide collateral to support bank finance may also be restricted.

Succession statistics are stark. Though estimates vary, in many countries, a third of businesses do not successfully make the transition from the third generation to the next. Given the high incidence of family-run businesses, this reality raises a number of concerns about why businesses do, or do not, survive, and the owners' attitude to proper succession planning. 

In most countries, the traditional route taken by companies to access the capital markets has been through the regulated market, which entails compliance with a number of criteria:

There is another, equally important, benefit: greater investor access to the capital market leads to more efficient utilization of capital resources. Experience clearly shows that there is significant demand for IPOs, and there is, therefore, space for additional investment opportunities throughout Europe.

 

Prospects creates an opportunity for SMEs to access capital markets relatively easily and efficiently, and to benefit from the advantages which, so far, have only been available to much larger entities.

 

Small and medium-sized businesses will now be able to raise capital by issuing bonds, issuing new shares, or selling existing shares to a pool of investors far greater than their own family or business partners.

 

In a tangible and practical way, Prospects therefore offers many businesses growth opportunities which have hitherto been simply out of reach. This new market has been designed specifically for SMEs and, therefore, reflects their particular needs and circumstances.

 

Prospects' Key features:

Companies considering admission to Prospects require the services of a corporate advisor, both before and following an admission process. The involvement of a corporate advisor by the SME ensures that transparency and corporate governance efficiencies are achieved and retained, thus instilling greater investor confidence.

 

Prospects will also help in succession planning - admitted equities may be traded on the secondary market, thereby un-locking value for existing shareholders.

have access to all relevant issue information available through the Prospects website – both before and after the issue of the equity and bond to the public enjoy the benefits of participating in small business growth be the venue where the SME shares and/or bonds may be traded, creating an exit route for investors ensure transparency and continued good corporate governance through the role of the corporate advisor who will continue to play a fundamental role while the instruments remain admitted to Prospects

 While SMEs generally enjoy very strong growth potential, and levels of profitability, the risks of investing in the SME market should not be ignored. As SMEs are, by their very nature, more susceptible to adverse market conditions, this particular market involves a different level of risk to the potentially better capitalised, larger organisations listed under the Prospectus Directive.