Making the right decisions on floatation

Most companies listed on the AIM market view their listing as a step towards joining the Official list in the future.

Nearly two-thirds (64 per cent) of the companies listed on AIM intend to float on the Official List in the future and most of these (87 per cent) expect to do so within the next five years. Cost and size were important facts in choosing AIM rather than the Official List with 42 per cent of the companies floating on AIM citing the cheaper cost as a reason for making their choice and 28 per cent saying they were too small to float on the Official List.

Lawyers and brokers are both seen to make a particularly significant contribution to companies going through flotation and they are seen to maintain the strongest relationships with their clients after flotation. Lawyers are considered to be the most loyal advisors by 33 per cent of respondents. The level of satisfaction with legal advisors is also high, with 78 per cent of companies being extremely or very satisfied with their own lawyers. Companies are more satisfied with their own lawyers than with those appointed by the sponsor or merchant bank who were considered by 40 per cent of respondents to have added just a little or nothing at all to the process.

Most companies (41 per cent) advise other companies considering floatation to choose good professional advisors experienced in floatations. A quarter warn against underestimating the amount of time and work that is involved in the process and 23 per cent warn of the danger of underestimating the costs involved.

Technical details

The survey was conducted by MORI for Osborne Clarke and was based on 100 telephone interviews, 50 with companies listed on AIM and 50 with companies on the Official List. Interviews were conducted between 2 and 16 October 1996. Companies on the Official List with a market capitalisation of over 163100 million were excluded.