The pre-flotation process
Although the formal flotation process for AIM is typically 3-5 months, best practice would suggest that companies considering joining AIM need to plan many months or even years in advance of this.
The process of floating on AIM is not simply about appointing a Nominated Advisor and selling your company in its current state to AIM investors. Most companies will need to do at least some work to get in shape well in advance. This may include undertaking a strategy review, reviewing the current management team and corporate governance issues. The process may involve a substantial review of your business plan and expectations before a NOMAD is even interested in bringing you to market.
The decision stage
Initial consideration should be given to both the personal and business reasons for a flotation. The directors will also need to consider the future direction of the company, and its likely capital requirements in the short, medium and longer term. Companies who require funds to fuel growth will need to consider all available funding options along with AIM. Raising equity finance, either public or private has its advantages but may inevitably involve some trade offs.
Many owners and managers of business that have joined AIM have done so simply to access capital, and to create a wider market for the company’s shares, enabling a part or whole exit for existing shareholders. Having been through the process they realise that the benefits of AIM were broader than they had expected.
- The opportunity to introduce visible employee share schemes which can help recruit, retain and motivate key employees.
- The potential to raise further investment capital via the issue of further shares after the initial flotation.
- It is inevitable that joining AIM will provide your company with a higher profile than if it were to remain private. The company will receive greater press coverage, thus widening the awareness of the company, its products and services.
- A flotation on AIM can bring with it an enhanced perception of the financial strength of your company from those within your business sector, as well as customers and suppliers. This enhanced status may lead to better commercial terms from those your company trades with, as the perceived risk of dealing with your company is diminished.
For companies to properly assess all the relative pros and cons of joining AIM, undertaking an AIM feasibility exercise at the outset is invaluable. This provides the directors and shareholders with key information about the suitability of AIM and highlights which areas of the business require particular attention prior to the flotation. If you would like to talk to us about your interest in joining the AIM market please contact Clive Allen on 01943 603319.