Findings from chartered accountants UHY Hacker Young reveals that the vast majority of companies leaving the Alternative Investment Market (AIM) are doing so because of mergers & acquisitions.
A total of 200 companies left AIM over the 12 months of 2012, marking the fewest number of businesses exiting from the junior market in some seven years. This fall has culminated in a 14 per cent decline on market leavers over 2011, a year when 116 firms left.
UHY Hacker Young’s survey finds that 21 companies left due to financial pressures, a fall of 26 per cent on the year before. AIM listees now stand at 1,095 which, despite the slowdown in delistings, is the fewest since 2004.
Initial public offerings (IPOs) brought in 43 businesses during 2012, a contribution which is down on the 45 recorded in 2011. While 2005 was the last time fewer companies left AIM; it was also the peak year for new listings when 335 IPOs were closed.
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Laurence Sacker, partner at UHY Hacker Young, says that while AIM might now be smaller, it is ‘more perfectly formed’.
‘Having shed many of its weaker companies during the recession, the majority of those that are left appear to be in comparatively good shape,’ he adds.
‘The increase in delistings due to M&A is a positive sign for the AIM market, especially given that AIM is, for the moment, holding its own against rival growth markets and that companies are confident that remaining on AIM is their best option to fulfil their fundraising needs.’
The 21 companies leaving AIM to financial stress is down by 36 per cent on the 33 leaving due to financial pressure or insolvency during 2011, and by 78 per cent on the amount leaving for the same reasons in 2009.
However, Sacker comments, ‘The support we are seeing for existing AIM companies is not matched by equal demand for AIM new issues, and IPO levels remain fairly anaemic.
‘There will need to be significant improvement in IPO activity if AIM is to ensure it can retain its lead as the world’s premier growth market.’