Blog: More Scottish firms could AIM higher
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By Rosalie Chadwick, partner and head of corporate finance at Pinsent Masons LLP
Since the AIM market was launched in 1995, more than 3,600 UK and international companies have joined AIM, raising £92 billion through new and further issues, and contributing around £25 billion to the UK economy each year.
Scotland has no shortage of businesses which are on a high growth trajectory and would be suited for an AIM listing, so it may be surprising that we lag behind other parts of the UK when it comes to opting for this particular route for securing investment.
This can be attributed to a number of factors, including a thriving private equity community, a large number of owner/manager businesses which are traditionally nervous about going to market, and a default tradition of trade sales as an exit route.
The AIM21 summit in Edinburgh on 22 September seeks to address this anomaly and will reach out to entrepreneurial business owners in the life sciences, IT/digital, and food and drink sectors, who could benefit from this form of second phase funding.
Hosted by Informatics Ventures, AIM21 is co-sponsored by Grant Thornton, Talent Spark, my own firm Pinsent Masons and the London Stock Exchange which will highlight its ELITE programme to support companies through their next stage of growth.
High calibre guest speakers include Cabinet Secretary for Economy Keith Brown, MSP, who will share how the Scottish Government is supporting businesses which are upscaling or internationalising, chairman of Scottish Enterprise and former Wood Group CEO Bob Keiller, who knows more than most about being at the top of a listed Scottish business, and the London Stock Exchange’s Marcus Stuttard who is Head of AIM.
The summit aims to stimulate discussion within companies on the different options available to them as they prepare to scale-up and take their business to the next level. Ideally, these established businesses will have good quality, ambitious management teams and high growth potential.
Typically, companies thinking of an AIM listing will have a market capital of £10-£100 million on listing and on average be looking to raise £5-£50 million. Companies working in life sciences, food and drink and IT/digital are a great fit for the AIM market and there are excellent Scottish roles models in these sectors, for example cloud hosting specialist iomart, Craneware and SMS. These three sectors have been consistently supported by the Scottish business angel network, many of whom will be present at AIM21 as investors interested in possible exit routes.
Companies considering an AIM listing can do a great deal themselves to prepare. A forensic and critical look ‘under the bonnet’ will highlight weaknesses compared to competitors, shake out old skeletons, and provide a platform to deep-clean operations and procedures. Major issues that are brought to light should be addressed prior to listing, otherwise valuation may be prejudiced when entering the market.
It is also worth bearing in mind, this kind of good housekeeping preserves the value of a company, irrespective of whether it ends up opting for a trade sale, PE or AIM. A common perception is that going down the IPO route is one-way-ticket associated with a heavy cost burden, but there are lots of examples of companies being acquired at healthy valuations immediately before going to market, because investors and trade buyers know this is when a company is in the best shape possible, so in reality this is money well spent.
For any business thinking of an AIM entry, our primary objective as legal advisers is to manage the process and ensure the transition from a privately owned company to public company goes as smoothly as possible.
As the number one legal adviser to AIM companies in the UK (source Adviser Rankings) it is perhaps no surprise that over the last 10 years Pinsent Masons has been involved in almost every significant AIM float which has taken place in Scotland, including Craneware, Cupid, Smart Metering Systems, iomart and Bridge Energy.
It is our intention to remain central to the many entrepreneurial success stories coming out of Scotland which are on the verge of taking the next step up to maximising growth potential via an IPO and we look forward to meeting some of this next generation at AIM21.
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