21 tips for companies thinking about an AIM listing
An AIM listing can bring significant benefits for ambitious companies. However, it’s not for every business. AIM listed management teams can attract investment and maintain independence to deliver their own long term vision. But they have to be transparent, accountable, and of course, interesting to investors.
As a leading AIM broker and to mark AIM’s 21st birthday we have put together a list of 21 tips for a successful AIM listing.
What to consider
- Decide how much control you want. Private equity investment can mean losing some autonomy. An AIM listing allows you to decide the long term plan.
- Know why you want to list. Lot of companies are looking for new sources of investment. But an AIM listing can also help reward staff through share schemes that allow staff to take a stake in the business
- Don’t expect the moon. Be sensible when valuing the company. Investors won’t pay for revenues that aren’t there, or assets that don’t look worth it.
- Think long term. Management teams should have at least a four to five year plan for their business in order to attract investors that are going to provide support through the growth phase of the business.
- Do it for the right reasons. Companies preparing for IPO need to show ambition and passion. If you are a management team whose ambition is to list on AIM and then exit as a financial engineering exercise, you are missing the point.
- Get advice. Not just from the formal advisers. Speak to employees, other businesses that have done it before and, and of course, speak to the professionals – lawyers, brokers, and accountants.
- Start planning now. If you think your company might be ready to list on AIM in a few years’ time then you should still start planning now. Preparation, and seeking the right advice early on, is key to a successful IPO process later on.
- Positioning is critical. It is important to articulate why you’re different and why people should invest.
- Put yourself in their shoes. In order to win investment, you have to think like an investor and highlight what makes you interesting to them.
- Tell a simple story. You need to be able to explain your business and your product in a way that is easy to understand.
- Keep it short and punchy. Investors dedicate less and less time for company presentations. If you can’t fully describe your business model in a few sentences, it is unlikely you will keep the attention of your potential investors.
- Have a clear vision. In order to be a successful company, you must have a clear vision, with a credible management team committed for the long term and recognising the importance of turning the vision in to a return on capital.
- Manage expectations. Successful listings have sensible valuations, based on realistic forecasts and achievable goals. Don’t promise what you can’t deliver.
- Under promise and over deliver. The key to a successful IPO is communicating a conservative plan and then aiming to exceed your investors’ expectations through your results.
- A stable management team pulling in the same direction. A successful AIM listed management team must have a long-term outlook – you need to fully engage and be in for the long haul.
- Stay focused on your plan. A lot of options are open to listed companies. It is important to focus on delivering your plan, and not go off on tangents.
- Maintain momentum. The company must keep up its engagement with its new shareholders and existing stakeholders following an IPO.
- Be transparent. For investors to support you for the long term they need to be able to trust you. Develop a reputation for clarity and transparency – it can mean investors backing you through the hard times as well as the good.
- Manage your reputation. An AIM listing can dramatically raise a company’s profile and add credibility. But credibility has to be earned through consistent delivery of the growth plan.
- Make sure you can provide time to talk. Investor communication is a key part of a CEO’s role and finding time to meet investors face to face is important.
- Don’t become obsessed by the share price. It may mean you lose sight of running your business and delivering the earnings that will actually drive that share price up.