How to float on AIM

1. Prepare yourself for the switch from private to public company. Even if you are only releasing a small minority of shares and will remain firmly in control, you must be ready to have your business crawled over by lawyers, accountants, bankers and brokers and to answer questions from them and the Press, as well as outside investors, not only during the float but ever afterwards.
You must learn discretion. You must not reveal ‘price-sensitive’ information to a few friends or make forecasts you cannot achieve.

2. You should ensure your board is as impressive as possible, which may mean recruiting a non-executive director with City credibility. Similarly, you need the most formidable advisory team you can muster.

3. You can only seek to float on AIM if you have a Nomad, usually a broking or financial group, which has been authorised by the AIM authorities. The Nomad must vet your own and your company’s suitability for AIM, check the claims made in your admission document and monitor your continuing suitability after you join.

4. You will also need a broker, whose commission is likely to be the largest single item of expense in the flotation process. Richard Warr at ImmuPharma says four to five per cent is ‘normal, though it can cost more’.
It is up to your broker to advise you on the timing and pricing of your float, which can cause grief and vexation.
The broker must market your company’s shares for the float and also keep the stock market informed of relevant developments thereafter and maintain a continuing dialogue after flotation.
The same firm can act as both nominated adviser and broker to your company, but need not do so. Warr at ImmuPharma, which has Dawnay Day as Nomad and KBC Peel Hunt as broker, believes separation works better.
‘A Nomad should work for you like an old-fashioned merchant bank. But, if it is the same as your broker, you don’t have the same freedom.’

5. Before you can float on AIM, you must produce a detailed, long-form report, based partly on your business plan. This will detail your company’s history, structure, operations, corporate governance and past and expected trading results.
For this you will need a reporting accountant, whose responsibility will be to the Nomad. This accountant, distinct from your own auditor, will be involved in carrying out the ‘due diligence’, checking the statements and information in the report, a task which will also need the services of a lawyer.
This due diligence process can vary in complexity depending on the nature of your business. For Betex, with most of its business in China, the legal due diligence was ‘the biggest hurdle’, according to finance director Barker.
It was for Mariana Resources, too, an unlisted Australian company with gold and silver prospects in South America, which raised £3.6 million on AIM in March. Chief executive John Sutcliffe recalls, ‘With our number and spread of properties, our domicile and our Australian shareholders, it was a complex business.’

6. As a public company, you will need to keep your shareholder list up to date for dividend payment and other purposes. For this you will need the services of a registrar. The registrar can act as a useful conduit of information between you and your shareholders. This role can take on key importance if corporate manoeuvres, such as takeovers or mergers, are afoot.

You should also dedicate at least one, and possibly two, senior people to liaise with your advisers. An AIM float can take from two to five months and, cautions Richard Hildebrand of law firm Trowers & Hamlins, ‘You should not underestimate the amount of management time the flotation process will take up.’

7. Consider possible online aids to a float. All IPO Plc is one company boasting an online platform for bringing together issuers, investment banks and brokers with retail investors and venture capital groups.

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