Douglas Gorman has had a change of heart. Only a year ago the chairman of Computer Management Group Ltd reiterated his long-held mistrust of the Stock Market, saying it is too short term and concerned with quick profits (CI No 1,444). But now, in a swift about-turn, Gorman says the company plans to float on the London International Stock Exchange within five years. This announcement was accompanied by the news that, for the first time, an institutional investor had been offered a small stake in the computer services company. Midland Montagu Ventures has paid UKP3.1m for a 4.3% stake in 27-year-old CMG, which until two days ago was 100%-owned by its 1,600 employees and their close relatives, with no one family allowed to exceed a 5% interest. The 600,000 shares purchased by Midland Montagu were existing stock put up for sale by employees that were either leaving the company or selling to release cash in the hard times that we’re having, so no new money is being raised for the company. CMG was valued in March by two independent sources – an auditor and a merchant bank – and is estimated to be worth UKP70m, or UKP5.15 a share, up from UKP3.20 two years ago. And Gorman reckons the company, which turned in pre-tax profits of UKP7m for 1990 on revenues of UKP96m, will report turnover in excess of UKP105m for 1991. In the chairman’s words, CMG is a victim of its own success – the company has simply grown too big to continue trading its shares solely between employees. The flotation is intended to provide the loyal shareholders with liquidity, and to raise cash for possible future acquisitions. The existing spread of 1,800 shareholders and the likely introduction of other institutional investors should protect the company against susceptibility to hostile bids. At the moment, Gorman notes, CMG does not need cash – CMG has no gearing, so the proposed flotation is not being driven by pressure to raise finance. But the company has big plans to sweep through Europe. At present, CMG gets 45% of its revenues from the UK, 45% from the Netherlands, and 10% from Germany. Currently the 17-year-old German operation has a staff of 100. Last year it acquired Frankfurt-based financial information consultancy and software services company Sysco GmbH, adding the equivalent of UKP6.5m in turnover. Over the next couple of years, the German subsidiary will begin to target all the markets addressed by CMG in the UK and Holland – the company provides management consultancy, information technology consultancy, software development, business systems and facilities management to the central government, local authorities and public utilities. Two more acquisitions were also made during the year in Holland, in the payroll processing arena, one of CMG’s niche markets. Computer Management Group aims in 10 years’ time to be a major European company, operating in most Community countries.
