The result of those meetings was an unusual package to be offered to the City and the public. To retain absolute control, Branson would sell only 34 per cent of Virgin Music and the other directors would keep 11 per cent. He personally retained 55 per cent of the music company. He would not float Virgin Atlantic or the nightclubs. In an internal transaction, Branson would buy Virgin Atlantic from the new, publicly-owned Virgin holding company for £6 million. The division of the empire, suggesting inevitable conflicts when Branson’s energies were focused on building the airline, was spontaneously highlighted by the occupants of the bland City boardrooms which he visited during his choreographed journey to recite the identical story to win the trust of investment managers in the fickle entertainment industry. ‘Not much of a problem,’ he replied unconvincingly.
Seelig hoped that Branson’s disdain for proper financial accountability and his management by whim would remain as unknown as his unhelpful delight at showing a video of himself free-falling on an unopened parachute towards possible death. Although Branson acknowledged that ‘there was little chance of me coming to grief because of the back-up chute’, his urge to publicise his gamble with death, reckoned Seelig, would hardly inspire fund managers to risk the public’s money in Virgin, even if they saw two instructors clasping Branson as he slid from the plane. Branson’s bravado nevertheless impressed Seelig. The banker was unaware that minutes after landing, Branson had shakily confessed his terror during an interview with Garfield Kennedy, a television documentary producer. On reflection, Kennedy had decided that the evidence of Branson’s emotional collapse was untransmittable, but the producer remained confused. Was Branson’s terror genuine or did he record a performance after Branson had persuaded himself of the danger? A similar uncertainty about Branson struck those seeking clarity about his business.
Branson offered no reassuring concessions. Dressed in a pullover and jeans, on his houseboat with four telephones ringing, he explained to an American journalist, ‘I was never interested in becoming a businessman. I’m good at spotting gaps in the market and filling them.’ A man with a goatee beard writing messages on the back of his hand who exclaimed, ‘I want to build the biggest media company in the world’, while admitting confusion about the technicalities of the accounts of his allegedly $200 million company, was struggling to inspire universal confidence.
Those concerned about any independent scrutiny of the maverick and his compliance with City rules should have been reassured by the appointment as non-executive directors of Sir Philip Harris, a carpet retailer, and Cob Stenham, the former finance director of Unilever who had just been appointed head of Bankers Trust. ‘I am excited at the prospect of working with such an enthusiastic team,’ said Harris who had pledged to spend £250,000 of his own money to invest in Virgin shares. ‘It’s an exciting venture,’ agreed Stenham. ‘I admire what the company has achieved.’ Although both men were renowned as astute, independent operators, gossip in the City suggested other flaws in Branson’s business.
Insiders described a board meeting of Top Nosh, Branson’s sandwich company, where a director with green hair lay prostrate on the floor recovering from the previous night’s excesses, while another director stared blearily into space silently opening and closing his mouth like a fish. Similar injurious reports mentioned Virgin’s abandonment of film production after an expensive failure with 1984; the loss of money from satellite television and Virgin publishing; and the permanent debts from Virgin’s shops despite copying HMV’s successful Megastore in Oxford Street. Only Virgin Music was profitable but any plans for expansion were vague. ‘Does Virgin ever have proper board meetings?’ Branson was asked during his City tour.
Branson was irked. The performance required for the flotation was infuriating. The questions targeted at himself or Simon Draper revealed suspicion about the long-term value of owning the copyright to music and records. He did not care for the ‘clever dick’ who reminded him about the City’s requirement for ‘transparency if you are going to win trust and confidence’. Of course, he withheld some information. His business could only flourish in secrecy. He would not reveal his ambition to buy EMI Music. He would make no concessions to win their trust. Nor would he tolerate the long, technical discussions about taxes and the minutiae of the offer document. Frequently he walked out of meetings with the excuse, ‘I’ve got to make a phone call.’ Draper and Berry could cope. But on one issue he was adamant. ‘I want more money,’ he demanded, gazing at the accounts prepared by Terrence Webber, the auditor. ‘The company’s worth more. I want more money for the shares.’
‘I can’t help you,’ replied Webber. ‘The rules on valuation don’t allow it.’ Their arguments were endless.
The slick presentation before flotation day, 13 November 1986, concealed Branson’s impatience and the City’s bewilderment about Virgin’s real value. ‘After the Big Bang,’ raved the advertisements, ‘how about a little pop?’ A pin-striped stockbroker disco-danced around his office with the caption, ‘From the rock market to the stock market’. Virgin’s publicists had persuaded the Sunday Telegraph to praise the new shares as potentially ‘a great success … a pioneering company which looks like carving out a major role in world markets’. In The Observer, Virgin was extolled as ‘one of the most glamorous flotations this year and should be oversubscribed’. Eighty-four thousand people, Virgin’s customers who idolised Branson, had applied to buy shares. Mobbed by his admirers on the City pavement demanding his autograph, Branson acknowledged the defining moment. ‘I’m humbled by the interest,’ he told the invited media through a permanent smile. The flotation had placed him precisely where he most desired: at the centre of attention. He was a star, who would share equal attention at a concert later that week with Peter Gabriel.
The reality, Branson had been told by Seelig, was gloomy. ‘We’re floating at 140 pence per share,’ the deflated banker announced, ‘less than we anticipated.’ Branson was distressed. Too many City investment managers were unimpressed by Branson’s performance and had shied away. Branson had only sold 34 per cent of the company to the public, keeping 55 per cent for himself. Although Virgin was valued at £240 million, and Branson would personally receive £21.1 million to invest in the airline, there was only £32.1 million for the Virgin Group, much less than expected. Branson spouted a smokescreen. ‘We’re pitching the offer low,’ he told interviewers through his fixed smile, ‘to attract a healthy after-market.’ Hours after the first public trading, the share price fell. Instead of the big hit with an avalanche of cash, he was saddled with financial stagnation, City suits, regulations and scrutiny. His cure was to escape. Draper and Berry would manage the music business while he focused upon his airline.
‘What’s the plan?’ he had asked Hugh Band and Chris Moss, the airline’s marketing directors. The two were godsends for Branson, tumbling over with ideas to promote the airline. Their latest idea was amazing. If successful, Virgin would be guaranteed enormous free publicity in Britain and America. ‘Why not try to be the first man to fly across the Atlantic in a hot-air balloon?’ asked Moss.
‘Fucking hell. We’ve got to do it,’ swooned Branson.
The two explained that Per Lindstrand, a thirty-eight-year-old Swedish balloon manufacturer and pilot, was looking for a sponsor for the epic flight. ‘It’s an amazing way to promote the airline,’ said Moss.
A conversation with Lindstrand confirmed the dangers. ‘You’re going to risk your life,’ warned the Swede.
On reflection, Branson realised that he had reached another milestone. The cosy speedboat dash across the Atlantic had reaped a windfall of publicity which in turn had earned millions of pounds for Virgin’s businesses. A record-breaking balloon flight across the Atlantic would elevate him into a unique league. The exposure, he calculated,