March 13, 2009

Baker Tilly and Faegre & Benson Survey Says Market Will Come Back Stronger


Key findings include:

  • 74% would still have listed, even if they knew how difficult 2008 would be
  • Majority of institutional investors (67%) and companies (69%) expect market to recover in 2010
  • 67% of companies and 80% of institutional investors expect to see market consolidation in 2009
  • 82% of AIM investors consider UK companies to be more attractive than international concerns over the next year or two
  • 61% of AIM companies believe their profile and credibility on AIM was either of some or major benefit in 2008.

The 13th annual Taking AIM survey by leading mid-tier accountants, Baker Tilly and international law firm Faegre & Benson LLP, has found that an overwhelming majority of AIM listed companies do not regret listing despite the difficult year the market has had in 2008.

The benchmarking survey of over 150 AIM companies and investors examined AIM's performance, expectations for 2009, regulation and AIM advisers. The survey was conducted at the beginning of 2009.

Commenting on the results, Baker Tilly's Head of Capital Markets, Chilton Taylor, said: "2008 saw the lowest level of AIM transactions since 1999, but AIM nevertheless fared better than almost all other growth markets. 2009 is likely to see a natural reduction in the problem tail-end of AIM, and see some necessary consolidation resulting in a welcome strengthening of the market."

"While AIM is not expected to recover in 2009," according to Faegre & Benson Corporate Partner, Melanie Wadsworth, "under valued, quality companies at the core of the market will mean that stock-picking should be increasingly rewarding."

Other findings include:

  • 62% of AIM companies say access to capital was a benefit of AIM despite the economic turbulence.
  • It was a difficult year for investors. Over 80% surveyed reported a negative impact on their own funds' performance, and more than half reduced the proportion of funds that they invested in AIM stocks.
  • 49% of companies believe that it is either likely or fairly likely that they will make an acquisition in 2009.
  • 40% of investors believe that the reduced number of IPOs has produced an increase in the quality of the market.
  • Over half (51%) of investors believe 100-150 IPOs a year would be sufficient to maintain quality and investor interest. (As compared with around 300 in 2006).
  • 79% of companies thought the regulatory obligations of being an AIM listed company were no more onerous than expected.
  • 62% of companies are considering AIM for further funding in 2009.
  • 86% of companies believe self-regulation is effective for the AIM market. However, investors disagree, with only 47% deeming self-regulation effective.
  • 65% of companies thought the implementation of IFRS had neither a positive nor negative impact on the perceptions of the company.
  • 43% of companies feel they have become much better at investor relations since listing on AIM.
  • 17% of AIM companies expect there to be pressure on the company's relationship with its bank.
  • 71% of companies have already taken measures to mitigate against the economic downturn.
  • Experts also call for the government to restore the level of VCT tax breaks that helped AIM in the past. It is foreseen that this would kick start the market by providing opportunities for growing UK companies who find themselves in an increasing equity gap, now arguably up to around £25m.

Download the 13th edition of the Baker Tilly and Faegre & Benson Taking AIM Survey.

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