When I started my legal career at the end of the 1990s, it was the peak of the .com boom. As a first year associate, I started right away on IPOs. Then the crash and Sarbanes-Oxley came about, and the IPO market first vanished, and then rebounded but remained quite elitist.
Today, the corporate and securities attorneys community is currently witnessing the emergence of an alternative exit strategy that involves the return of the IPO for smaller players: listings on the London Stock Exchange’s AIM.
While critics and detractors are ready to argue that an AIM listing is a “B” alternative to a U.S. NASDAQ listing, and point to a UK regulatory regime that may not be as comprehensive as the one available under the domestic U.S. securities laws, the fact of the matter is that AIM has positioned itself as a welcomed breath of fresh air in the smaller IPO market, which the 2002 Sarbanes Oxley had virtually “choked” in the U.S. In practical terms, this means that today companies with relatively modest revenues, and yet with promising technologies, have an alternative way to go to market and raise capital with an AIM listing.
The AIM presents some peculiarities, such as for example the requirement of having a “Nominated Advisor” (NOMAD) that would essentially vouch the listing. Yet, the use of NOMADs creates a self regulatory and self-policing regime that may increase transparency and provide a certain level of comfort to investors, which would otherwise lack on comparable trading platforms such as the OTC:BB in the United States.
Is AIM a magic source of cash for startup? I wouldn’t think so. But is it bringing the IPO back to smaller players? Most definitely, it seems.