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Home » Features » New research: “IPO doesn’t always lead to stronger performance”

New research from Kirchhoff Consult AG has analysed the latest financial results of 108 small caps that listed in Europe in 2019, and found that 42 operated at a financial loss last year, compared to 38 in 2018.

The research, which was commissioned by MBH Corporation PLC, a UK headquartered listed diversified investment holding company that acquires successful, well established small to medium enterprises across multiple geographies and sectors, also reveals that only 57 of the companies saw their revenue increase between 2018 and 2019 and just 30 saw their operating income (EBITDA, EBIT) rise.

Out of the 108 newly listed small caps, only five paid a dividend to investors for the last financial year.

Callum Laing, CEO of MBH Corporation plc said:

“This research clearly shows that an IPO doesn’t always lead to stronger performance and increased revenue. In the two years since we listed, we’ve managed to sustain our growth by executing a proactive programme of finding highly successful, profitable and well-established businesses to add to our portfolio.”

By leveraging its in-house strategy, MBH seeks to create shareholder value through the consistent and accretive acquisition of excellent companies. Profitable companies convert their private shares into public shares in MBH Corporation plc at an agreed multiple.

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Fixed for 365 days, company owners are then incentivised to accelerate their growth trajectory using the resources of the plc including expertise, skill transfer of best in class practices, cross-selling to other group companies and where appropriate, zero cost funding for new growth projects.

Each group company retains its autonomy by following appropriate corporate and financial governance, and business owners are also incentivised financially to enhance shareholder value. As shareholders, they benefit personally from this.

As part of its analysis, Kirchhoff Consult looked at all small caps who listed in Europe in 2019 on Frankfurt Scale, London Stock Exchange AIM, Euronext Access and Growth (Brussels, Dublin, Lisbon, Paris), Borsa Italiana AIM-MAC and Nasdaq First North Growth.

Of the 108 companies in the study, 14 did not have data available on revenue and 26 on operating income.


This article is not investment advice. Investors should do their own research or consult a professional advisor.

Stuart Fieldhouse Editor

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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