18 focus on aim
Don’t discount AIM as an objective
Economic uncertainty in Europe and North America has been reflected in significant turbulence in global stock markets in recent months – but that’s no reason to discount a future AIM listing from corporate strategic planning. That’s the opinion of Nick Watson, partner with chartered accountants and business advisers Grant Thornton – recently confirmed by two independent bodies* for the second year running as the firm with the most AIM clients. So, with its experience and involvement in the field, the thoughts of Grant Thornton are worth heeding by small and medium-sized companies considering AIM, writes John Burbedge
“AIM is still the one of the clearest options open to smaller companies to raise equity finance, or as an exit route for private companies and owner-managers,” says Watson.
As it says on the tin, AIM (Alternative Investment Market) provides another funding option for companies seeking to grow, or perhaps for entrepreneurs to monetise the many years of hard work they have undertaken while establishing their business.
But, AIM offers more than just another avenue to pursue in order to raise capital after talks with the banks, business angels, PE and VC investment groups have ground to a halt, or that private sale has not materialised.
In addition to peer group ‘coming of age’ recognition and a potential stepping stone to the main markets, the key bonus that AIM can provide is international access and awareness – and the global credibility and authority conveyed by London’s stature in the trading world.
These are not values that readily equate to cash profit on the bottom line, but they could provide the impetus for a company’s strategic growth plans within and outside the UK.
“Because of all this, AIM today is in a good place and a valuable strategic tool,” says Watson.
“London is still seen as a highly popular centre to do business, and one trend we are seeing in favour of AIM is its internationalisation for raising equity finance. We are seeing more internationals coming onto AIM,” said Watson.
“Traditionally, companies have listed in the US or London. Now we are seeing people with a primary listing also considering a secondary brand-orientated or overseas subsidiary listing. It’s because
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the trading world is becoming more international.”
Either way, seeking an AIM-listing for funding growth or as an exit route needs careful planning and timing – and professional expertise to guide the strategic 3-5 year journey.
“Companies need to consider the sourcing of their growth funding from a portfolio of different providers nowadays, and AIM is a valid funding option.
“The key for AIM-funding or a business sale is to get all your ducks in a row – management team, internal processes, business model, governance etc – so that the business is delivering on its promises. The story is then right whatever the route chosen. And then don’t rule out any option, because it might be private sale, private equity funding or AIM – the best businesses always provide themselves with viable choices.”
Founded in 1995, AIM is a sub-market of the London Stock Exchange and the cachet of its illustrious parent does it no harm on the global stage. Not that AIM has not already adequately proven itself as a strong and vibrant market in its own right, having helped more than 3,000 smaller and growing companies to raise capital for expansion.
Much of the popularity of AIM lies in its relative ease of entry and ‘user-friendly’ regulatory regime compared to other markets. AIM listing does not always require at least three years of audited statements, nor market capitalisation exceeding £700,000, and financial reporting is more flexible. Ongoing costs for AIM compliance purposes are invariably lower than the main markets.
While the tax advantages of AIM are not so great as they were since the removal of Capital Gains Tax taper relief in April 2008, AIM investors can still gain certain
THE BUSINESS MAGAZINE – THAMES VALLEY – JULY/AUGUST 2012
Nick Watson
tax reliefs in the fields of inheritance tax, gifting of AIM shares, and enterprise investment schemes.
The more flexible regulatory system of AIM is not something that should raise doubts for prospectives. The ‘comply-or- explain’ regulatory model of the London markets, based on principles rather than rules, is still held in world regard – AIM espouses the same doctrine.
“The serious companies listing on AIM are looking to maintain high corporate governance standards anyway, because we live in an increasingly transparent world in which companies cannot afford not to behave as an appropriate corporate citizen,” adds Watson.
(Corporate governance is a specialist field for Grant Thornton, which has produced industry benchmarking corporate governance reviews for the past ten years.)
* Hemscott AIM Advisers Ranking Guide, and the Morningstar Professional Services Rankings Guide.
Details: Nick Watson 0118-9559221
nick.j.watson@uk.gt.com
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