AIM - Is It Right For Your Business?

The Alternative Investment Market (AIM) is getting a lot of publicity. One of the fastest growing markets in the world today, its popularity has attracted over 2,500 companies since it began in 1995, including several from the Westcountry.

I have helped a number of companies be listed and raise funds on AIM. For some South West companies it is a great platform for successful growth.

Established by the London Stock Exchange, AIM provides businesses wanting a public market for trading shares a less regulated alternative to the full rigours of a listing on the Official List of the LSE.

What are the benefits of an AIM Listing?

* a possible exit route for existing shareholders to realise some or all of their investment.

* the ability to raise finance through wider market exposure.

* Once listed, the Company’s shares can be used as currency for future transactions instead of cash, for example to help fund acquisitions.

* Shareholders should enjoy increased liquidity. This is especially useful for company employee share schemes giving staff shareholders a means of realising their investment.

* Increased competitive edge through greater visibility and status generally.

What are the main advantages of AIM over other markets?

* AIM has greater credibility amongst institutional investors compared to more junior markets, partly due to the London Stock Exchange regulating it. This gives AIM companies access to potentially much greater amounts of finance than listing on the more junior markets.

* Fewer entrance requirements and less onerous continuing obligations than to the Official List, for example:

? no minimum percentage of shares need to be made available to the public on AIM

? AIM companies do not need a prior trading record (although, in practice, a trading history is normally essential to demonstrate credibility)

? no minimum market capitalisation on AIM

? the admission document is simpler and does not need prior vetting by the London Stock Exchange and

? prior shareholder approval is not needed in many acquisition situations.

What are the disadvantages?

The main downside is the significant professional costs for companies to join, which can often only be justified if the business is needs to raise significant amounts of finance.

Costs comes from the engagement of a nominated adviser (NOMAD) and broker and from the work required from the applicant company’s accountants and lawyers to guide the company through the admission process and to ensure that the company is in appropriate shape for joining AIM. The NOMAD will usually have its own advisers which adds to the cost.

The South West boasts the full range of professional support needed to take companies to AIM, and have the added advantage of not charging London rates.

Listing is not right for all companies and NOMADs will put potential applicants under a great deal of scrutiny to satisfy themselves that the company has a quality business with a strong management team.

It may take time to go for an AIM listing but for many companies the rewards certainly justify the effort.

For further information, please contact James Evans on 01392 685243 or e-mail james.evans@foot-ansteys.co.uk

Published 06/03/2007.