AIM: Is it in your business’ sights?
With activity on AIM scarce a GB lunch discusses what the market offers UK business
The majority of companies that float on AIM do so to raise finance that can be ploughed back into the business to help it grow. Adam Warren, managing director of Greencare H20, which provides plumbed-in water coolers, is considering this for his business.
“An AIM float for us would really be about raising capital to expand into the domestic and overseas markets, which aren’t that well developed, including Holland and Belgium,” he says. “We are hardly scratching the surface of the £2-3bn UK market with what we do.”
As a business looking to expand on the international scene, AIM could be a good move in terms of both money raised and for increased profile.
Business size matters
But companies considering AIM must think about whether they are big enough to join the market. In the first half of 2007, about a fifth of firms looking for funding raised up to £5m, but 10% achieved more than £100m. There’s been a shift recently from small entrepreneur-led businesses to bigger, more corporate, companies joining the market. Investors are eager for the bigger deals and better returns. This has led to concern over being priced out. As one lunch delegate suggested: “18 months ago the market capitalisation wouldn’t have been a real issue, but now it is.
Also, your company needs a really interesting story at the moment. And if they want an interesting story at £50m, they are going to want a really interesting story below that.”
Entrepreneurs fear losing control?
However, for some entrepreneurs, the real fear of flotation is losing control of the business they founded. James Hibbert, founder of the bespoke men’s clothing company Dress2Kill, agrees, saying: “My worry would be the transition from not having had any external investors and being my own boss for the past eight years.
“When I go to AIM, how much of my life is going to change? I get up in the morning and I go and run my business. I make the decisions in my business and I’ve got a free reign, which is an area I believe I thrive in.”
Former Farrer & Co partner Adam Walker answers: “Life’s going to change quite a bit. You’ll have to have non-execs on the board. It is a different world. It’s not something to fearful of, but it is something to be very aware of.”
The right team
The attendees began to discuss bringing in non-execs and the various benefits of introducing experienced personnel. All agreed this can be a major benefit even if you aren’t a listed company.
Paul Clark, managing director of recruitment business Penta Consulting, recommends non-execs, saying: “We brought in a non-exec chairman and it’s been really motivating over the past year, because I’ve never had a mentor to coach me. Things have changed incredibly; it’s completely different. It’s all about sales, sales, sales.”
The importance of getting the right non-execs is paramount, the guests agreed, and there was concern that some companies almost saw it as an after-thought. This would be a major mistake. Your company will change if you join AIM, so you need to take your time, get advice and think your decisions through. “It’s incredibly important to pick the right team,” advises Walker, “and spend time doing it rather than rushing.”