“Why bother with an IPO?” asks Audio Network founder

Hurst and Andrew Sunnucks founded Audio Network in July 2001. The firm produces music and sound effects in-house for the broadcasting, advertising and production industries. On September 10th, a venture capitalist offered the pair £5m of start-up capital. A day later, the Twin Towers were hit. “Suddenly the world had changed,” said Hurst. “Suddenly we had no cash. There was no money on the table.”

The firm was saved by a network of industry folk and angels who came forward with the cash that Hurst needed to get started. Today, there are 40 shareholders in the plc, with Hurst and Sunnucks retaining 25 per cent of the business each.

With this level of support, Hurst is doubtful he’d ever consider an IPO. “There are easier ways to release cash from the business,” he says. “We’re very fortunate that a lot of our investors are former City investors at Merrill Lynch and similar financial institutions. If anybody wanted to sell any shares then it would just take a quick ring round these investors. If they didn’t have the cash, they could just pick the phone to another one of their hedge fund mates and say, do you want to put £100,000 in? Yes. Fine.”

Audio Network currently turns over £3m, with a predicted turnover of £12m within five years. Its clients include 95 per cent of the top 100 UK TV production companies, with a customer retention rate of 90 per cent. No wonder Hurst is confident that private funding will be easy to acquire.

“Unless you are a billion-pound company, why would you want to be quoted?” he asks. “There’s so much private equity around; £100m is not a big sum. Surely you’d just take £50m from a private equity fund rather than have all the hassle of going through the hard graft of listing? In essence, we’ve already established our exit. The angels on board can easily bring all their partners on should anyone want to get out.”

Hurst grins, “I doubt anyone’s ‘getting out’ for a while, though. With year-on-year growth at a steady 50 per cent and a valuation of £100m within five years, we’re all sticking on in there.”

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