Improve your marketing, AIM told

A survey by UK accountancy firm Pannell Kerr Forster (PKF) has led it to conclude that the UK’s Alternative Investment Market (AIM) for growth companies needs to be more proactive to increase investment from institutions and the rest of Europe.

The survey, which canvassed the views of nearly half the companies listed on AIM and 17 others which had moved up to the Official List, found a generally positive attitude towards AIM. But, according to Nick Whitaker, head of corporate finance at PKF: “More than a third of respondents feel that the market’s image and standing has declined over the last year, principally because of poor liquidity. We firmly believe that the AIM marketing team needs to grab the bull by the horns and play a much more proactive role in promoting both AIM and traded companies. Key to its future success will be the attraction of institutional and European investment.”

On the positive side, there was general customer satisfaction with AIM, despite difficult conditions for small companies in the UK; it was viewed as a good stepping stone to the Official List; and it was acknowledged that companies have continued access to capital by secondary fund raising.

As a result of the survey, PKF has made five recommendations. First, a review of the overlap between AIM and the Official List to consider the threshold at which companies transfer and provide a clearer branding of AIM, identifying objectives and benefits. Second, sector indices should be created and published to help monitor growth and high income stocks to stimulate investor interest in the market. Third, there should be tracking of the top 50 performers to highlight and give profile to the success in the market. Fourth, AIM should continue to take a proactive role to encourage institutional investment in the market combined with a greater emphasis on attracting European investment. Finally, there should be increased use of media PR specialists by AIM-quoted companies to report positive stories on their performance.

The survey also found that nearly a third of companies which had moved up to the Official List from AIM felt their expectations had not been met, with lack of liquidity no less of a problem. Concludes Whitaker: “Often companies which set their sights on the bright lights of the Official List don’t stop to think about what a huge leap it can be. It’s rather like jumping from the First Division straight into the Premier League and expecting David Beckham to be instantly interested in joining you as a striker. It is sometimes the case that companies would be better off staying where they are until they are really ready.”

PKF is the eighth-largest firm of accountants and business advisers in the UK.