But for an IPO to happen, there needs to be three things: the company needs to be doing well, the markets have to be receptive and the shareholders have to be in a mood to sell."The company is performing ahead of expectations. It is debt free.This has prompted QinetiQ's bosses to consider an early float, which had originally been penned in for some time between 2006 and 2009.While the Morgan Stanley report said QinetiQ was fit to be floated, the company must make some changes to its management to meet the requirements of the Combined Code on corporate governance.Sir John said: "We have recently appointed two new non-executive directors - Nick Luff [the chief finance officer at P&O] and Peter Fellner [the chairman of biotech company Vernalis] - and we will be doing more."QinetiQ would use the proceeds of a float to fund an acquisition spree - possibly in the US. In its last set of accounts to the year ending 31 March 2004, QinetiQ revealed a £56.7m operating profit on a turnover of £795.4m. Obviously, the company is doing well, which is encouraging from the point of view of an IPO.

Some 13 per cent of QinetiQ shares are owned by employees, so a float would lead to a windfall for the 9,000 staff, including 7,000 scientists.QinetiQ hired investment bank Morgan Stanley last year to conduct a "readiness study" to see whether the company was in a fit state to be floated.Sir John Chisholm, the chief executive of QinetiQ, said: "Broadly speaking they ticked the box Late 2005 is getting into the window [for a float]. The two companies have also discussed future production and hope to increase capacity to one million cars a year, produced in both Longbridge and China.However, even if the tie-up goes ahead, there are likely to be thousands of job losses at Longbridge, as SAIC seeks to make cost savings.. In effect, therefore, it can call the shots on when the company is listed.The MoD owns 56 per cent of QinetiQ, which is chaired by Dame Pauline Neville-Jones, a BBC governor and former chairman of the Joint Intelligence Committee. While SAIC will not attend, Ms Hewitt is expected to raise the issue of MG Rover with the Chinese Ambassador, Zha Peixin.A spokesman for SAIC said: "We remain positive about the deal, and talks are on track."While the exact details of the deal have yet to be agreed, it is likely that for its £1bn investment in MG Rover, SAIC would get a 70 per cent stake in the business. QinetiQ, the partially privatised defence laboratory group, is being groomed for a £1bn-plus flotation later this year. This would be the biggest float of a technology company on the London Stock Exchange since the bubble burst in 2000, but it could also lead to claims that the Government had sold QinetiQ on the cheap.In 2003, Carlyle paid £150m for just under a third of QinetiQ.

If the US private equity company, which has close links to the Pentagon, was to offload its stake through the listing, it would have more than doubled its money.While Carlyle holds a minority stake, it controls the majority voting rights in QinetiQ under the public-private partnership with the Ministry of Defence. However, a spokeswoman said: "The Secretary of State has made it clear that the Government fully supports the joint venture between MG Rover and SAIC, and hopes that the negotiations are successfully concluded as soon as possible."This week is a critical time for MG Rover's proposed tie-up with SAIC. The Chancellor, Gordon Brown, will take time out of his four-day trip to China to meet Ma Kai, the Minister for the National Development Reform Commission, which must approve SAIC's deal.Chinese media have reported that the Beijing government is divided on whether to allow SAIC to buy MG Rover. Some officials see the £1bn price tag as too high for a loss-making company that is losing market share. Others believe SAIC's deal with MG Rover will give the Chinese company access to an established brand and research and development skills, according to the reports.Meanwhile, on Thursday, Ms Hewitt will meet a delegation from 150 Chinese businesses, who are in the UK to promote closer trade ties. A spokesman for the Birmingham Chamber of Commerce and Industry said: "The closure of Longbridge would be devastating to the area MG Rover does not manufacture a great deal, it assembles.