The London Stock Exchange’s market for smaller growing companies, the Alternative Investment Market, had its biggest quarter of takeover activity in over two years as Aim-listed firms become attractive takeover targets.
According to the accountancy group UHY Hacker Young, the three months to the end of September saw 13 merger and acquisition deals involving Aim firms.
While the takeover activity is a sign that the Aim itself is performing healthily, it also paints a brighter picture for Britain’s smaller, aspiring businesses.
“The credit crunch and its aftermath saw hundreds of Aim companies forced out of business altogether, but the last year has seen a real turnaround. Aim has returned to being an environment where high-growth companies can attract investment, after some very difficult years,” said Laurence Sacker of UHY.
The number of bankruptcies is down too. UHY says that the number of insolvent companies leaving Aim has hit its lowest level since the financial crisis. Just 18 companies delisted from Aim in the financial year (beginning in April) 2013/14 due to financial stress and insolvency, compared with 82 at the height of the recession in 2008/09. Over 1,000 companies have left Aim since the financial crisis.
“Insolvencies haven’t been this low since pre-Northern Rock,” Sacker said. “Over the last six years, a lot of M&A deals on the junior market were effectively the purchase of distressed assets at bargain prices. That isn’t the case any longer, with major deals starting to return to Aim.”