AIMing high

2005 saw the 10th anniversary of AIM, the London Stock Exchange’s market for growing companies. Since its launch in 1995 more than 1,900 companies have been admitted and more than £17 billion of capital has been raised.

The requirements for admission to AIM are less onerous than the main market with no requirement for a three year trading record and no need to place 25% of the shares in public hands. Furthermore the AIM structure is designed to support the requirements of smaller, growing companies.

The decision to float your company on AIM will mark a major milestone in its development. It can be exciting but also stressful and time consuming. Neither is it a cheap exercise; initial costs are likely to run into hundreds of thousands of pounds. There are many potential advantages as well as disadvantages and these are summarised below.

Advantages

• Access to a large pool of capital especially given the keen interest on the part of institutional investors.
• Possibility of financing expansion by use of shares as an ‘acquisition currency’.
• Creation of a market in the company’s shares together with an objective market valuation.
• Provision of an exit route for existing investors.
• Ability to broaden the shareholder base.
• Enhancement of the profile and image of the company.
• Ability to motivate employees by creating a share scheme.
• Tax breaks for investors.

Disadvantages

• Closer public scrutiny of the company and its performance.
• Increased accountability to shareholders for the directors.
• Institutional shareholder pressure on dividends and short term profitability.
• Uncertainty of market conditions which may affect the share price.
• Need to comply with regulatory requirements.
• Possible loss of control.

If you would like to find out more visit www.londonstockexchange.com/aim