How to float on AIM
Getting your business prepared for flotation. Here's a brief guide how to do it.
Assemble a team you're comfortable with. This will include an accountant, lawyer, NOMAD and possibly separate broker. You need to get on with them all, since you'll be spending lots of time with them.
Your accountant is probably the first to select, since you probably know him/her well already. Just make sure they are experienced – you will suffer if they haven't done it before either.
It's then usually easiest to use your accountant's contacts; that way you can be sure the team know each other and they'll all be suitable for your deal; if they've worked on floats together before it will make your life easier.
Consider several advisors rather than choosing the first, and get quotes from each.
Ask about contingency fees (where you pay a higher fee if the deal happens, but much less if it doesn't). Plenty of firms offer this, and enough floats get pulled for reasons beyond a company's control that you may want the comfort.
Speak to institutions which have invested in companies like yours on AIM about which brokers they respect or like; if you want to maintain a strong profile after the float, a broker respected by your investors would help a lot.
Approach your accountant at least six months before you want to float, as they have lots of groundwork to do. They'll look at profit trends and appropriate timing to float, and whether the group needs to be restructured. The board needs two non-execs, clear accounting procedures and robust accounting policies. You can't become a PLC with negative reserves, either – it requires tax clearance that could take 30 days.
You'll need robust financial forecasts. Preparation is crucial as cancelling a meeting with an institution once a broker has arranged it can cast doubt on the validity of your float.
Be prepared for an extremely time-consuming process. In terms of overall costs, expect to pay the following:
… NOMAD fee (corporate finance) – £75,000 to £125,000
… Broker's commission on funds raised – 3% to 6% of funds raised
… Lawyers fees for the company – £50,000 to £100,000 – depending on the complexity of the float
… Lawyers fees for the NOMAD – £25,000 to £40,000
… Reporting accountants – £50,000 to £100,000
… Financial PR – £10,000 to £20,000
… Registrars – £5,000
… Printing – £5,000 to £15,000
… AIM fee – £4,000
TOTAL: £225,000 to £420,000 plus 3% to 6% of funds raised