Is AIM the place for you?
In the present uncertain economic climate, companies may be querying the relevance of remaining on the Alternative Investment Market (AIM). Created to accommodate the needs of smaller, young and fast-growing companies in a period of prosperity, the potential advantages of an AIM listing appealed to many, even inciting a number of companies to move from the Main Market.
For those seeking the benefits of being a quoted public company, the advantages of being on AIM include:-
- A simpler admission process.
- A more relaxed regulatory environment than the Exchange’s Main Market, and significant tax advantages for Investors.
However the ongoing financial crisis is hitting AIM companies hard. The number of companies quoted on AIM has fallen from 1,700 at its peak in December 2007 to 1,524 in early March as a result of falling share prices, low valuations and inability to raise funds. This has been exacerbated by changes to the Venture Capital Trust (VCT) Rules in 2006 which caused funding from VCTs to virtually disappear. The value of trade on the market in January slumped to less than a third of its level a year before, down from £5.4 billion to £1.6 billion and, as liquidity has fallen, the cost of trading has increased.
For companies facing financial difficulties, there are a number of options available. Companies may look for outside investment or other means of raising funds, or may choose to seek investment from larger companies who are hoping to acquire quality, undervalued assets. Another option may be to merge with other companies, in order to become more attractive to potential investors.
Finally, the company may choose to de-list from AIM altogether, electing instead to remain public but unquoted or to go private. In the event that it is felt that it would be advantageous to obtain a de-listing from AIM to go private, then the consent of all the shareholders will be required.
If you are an AIM listed company concerned about the viability of maintaining your listing in the current climate, or keen to explore the implications of other possible options, please contact Julian Goulding.