The London Stock Exchange AIM & Growth Company Forum: Exploring Successful Strategies on AIM

The London Stock Exchange recently hosted the AIM & Growth Company Forum, designed to help growth companies navigate the stages of planning, executing, and succeeding after an Initial Public Offering (IPO).

While the forum primarily targeted the Alternative Investments Market (AIM), the insights shared are beneficial for any company looking to raise public capital through IPO and maximise the advantages of being publicly traded.

This article explores the reasons companies opt for an IPO on AIM and the essential factors that contribute to a successful listing on this market.

Key Reasons to IPO on AIM

• Access to a Wide Pool of Capital

One of the primary motivations for companies pursuing an IPO on AIM is the access to a broad and diverse pool of capital. This influx of funds allows companies to accelerate their growth in line with their strategic objectives. Public markets offer liquidity and an efficient means to finance expansions, acquisitions, and other growth initiatives.

• Retaining Long-Term Strategic Vision

Going public on AIM enables companies to maintain control over their long-term strategic vision. Unlike private equity or venture capital, which might demand significant control or quick exits, public investors typically support the company’s long-term objectives. This alignment with “patient” capital fosters a stable environment for strategic planning and sustained growth.

• Enhanced Credibility and Profile

Listing on AIM significantly enhances a company’s profile and credibility. The increased transparency and regulatory compliance required of public companies augment their reputation, making them more appealing to potential customers, partners, and employees. This elevated status can translate into competitive advantages, stronger business relationships, and new opportunities.

• Attraction and Retention of Key Talent

Being a publicly-listed entity can enhance a company’s appeal as an employer. Public companies often offer share options as part of their compensation packages, serving as a powerful incentive for attracting and retaining top talent. The potential for equity growth motivates employees and aligns their interests with the company’s long-term success.

• Liquidity and Exit Strategy for Early Investors

An IPO offers early investors, including founders, venture capitalists, and angel investors, liquidity, and an exit strategy. Listing on AIM facilitates a structured and transparent way for these stakeholders to monetise their investments while allowing them to retain shares and benefit from potential future growth post-IPO.

How to attract investors to support your IPO

• Clear and Compelling Business Proposition

A successful IPO on AIM begins with a clear and compelling business proposition. Companies need to articulate succinctly what they do, how they generate revenue, and their growth strategies. This clarity helps attract investors who believe in the business model and its potential for sustainable growth.

• Early Engagement of Advisers

Securing professional advice early in the IPO process is crucial. Experienced advisers, including Nominated Advisers (NOMADs), brokers, lawyers, and accountants, provide essential guidance on regulatory compliance, market expectations, and strategic positioning. Their expertise ensures that the company is well-prepared for the demands of being a public entity.

• Strong Corporate Governance Framework

A robust corporate governance framework is indispensable for a successful IPO. AIM-listed companies must demonstrate high standards of governance to gain investor confidence. This involves having an experienced Board of Directors, a seasoned Finance Director, a specialist Company Secretary, and transparent reporting practices. Good governance practices mitigate risks and foster trust among investors.

• Comprehensive Risk Disclosure

Transparency about business risks and how they are mitigated is crucial. Investors require a clear understanding of potential risks and the company’s plans to address them. Full disclosure builds investor confidence and positions the company as a credible and trustworthy investment.

• Focus on Sustainable Growth over Valuation

While achieving a favourable valuation is important, it should not come at the expense of long-term growth and stability. A balanced approach that prioritises sustainable growth and value creation over time resonates better with investors seeking enduring returns rather than short-term gains.

• Thorough Planning and Preparation

Planning is the cornerstone of a successful IPO. Companies must engage in meticulous preparation, including financial audits, strategic planning, and internal process reviews. Recognising the impact of the IPO project on daily operations and preparing staff for the transition ensures smoother execution and post-IPO stability.

Maximising success as a public company

• Effective Marketing and Investor Relations

A well-executed marketing and investor relations strategy is essential for a successful IPO. This involves creating and communicating a compelling investment story, proactively engaging with potential investors, and maintaining transparent and consistent communication post-IPO. Building and nurturing investor relationships is essential for sustaining market confidence.

• Ongoing Compliance and Reporting

Continued adherence to AIM’s regulatory requirements is vital for maintaining investor confidence and market integrity. Regular, transparent financial reporting and compliance with corporate governance standards are key to sustaining positive investor relations and avoiding regulatory issues.

• Adaptability and Responsiveness

Post-IPO, companies must be adaptable and responsive to market conditions and investor feedback. This means not only reacting to external pressures but also proactively managing corporate strategy, communications, and investor expectations.

• Leveraging AIM’s Flexibility

AIM is known for its relatively flexible regulatory framework compared to other markets. This flexibility can be advantageous for growth companies looking to list. AIM’s regulatory approach is designed to accommodate smaller, less mature companies, making it an attractive option for younger firms that may find the requirements of other exchanges onerous.

Conclusion

The AIM & Growth Company Forum underscored the strategic advantages and foundational elements for executing a successful IPO on AIM. Access to diverse capital, retention of strategic vision, enhanced credibility, talent attraction, and providing liquidity for early investors are compelling reasons for companies to consider listing on AIM.

Key factors for a successful listing include:

• Clear Business Proposition: Articulate the business model, revenue generation and growth strategies clearly.
• Early Professional Advice: Secure guidance from NOMADs, brokers, lawyers, and accountants early in the process.
• Strong Governance Frameworks: Establish high standards of corporate governance to build investor confidence.
• Transparent Risk Disclosure: Be open about business risks and mitigation strategies to maintain trust.
• Focus on Sustainable Growth: Prioritise long-term stability and value creation over short-term gains.
• Meticulous Planning: Engage in thorough preparation, including financial audits and strategic planning.
• Effective Marketing and Investor Relations: Develop a compelling investment story and maintain consistent communications.

Leveraging AIM’s flexible regulatory environment can further facilitate a smooth and successful IPO process.

By following the insights and best practices discussed at the AIM & Growth Company Forum, companies can navigate the complexities of the IPO process, capitalise on the benefits of being publicly listed, and set the stage for sustained growth and success.

Partnering with JTC

At JTC, we have extensive experience supporting companies list on Alternative and Main Market of the London Stock Exchange (LSE). Our vast network of specialist advisors, including NOMADs, brokers, lawyers, and other professionals, possess the expertise required to meet the needs of any listed business.

JTC is one of the largest, and the only listed, independent administrators providing a comprehensive range of services to AIM-listed companies. These services include corporate governance, company secretarial, IPO readiness, administration, accounting, financial reporting, AIFM and depositary.

Our dedicated team of specialist governance professionals in London manages a diverse portfolio of listed companies at the LSE.

Please feel free to contact Christopher Gibbons or Susan Fadil, to discuss how we can support your AIM-listed business.

For more information on our listed services, please visit our website here: JTCGroup.com/listing/