Helping you prosper
Press release covered in Investment Week, Portfolio Adviser, Money Marketing, IFA Magazine, Proactive Investors, The Armchair Trader, thewealthnet and Daily Mail's This is Money
Our research shows that takeovers of AIM listed companies remain the biggest single cause of companies delisting from AIM. Of the 2,129* delistings that took place over the last 20 years 767 were because the company was acquired.
The research found that 31 AIM companies were delisted because of takeovers in the last year – 37% of all of last year’s 85 delistings.
AIM, the London Stock Exchange’s market for growth companies has been shrinking, in terms of the numbers of companies listed on it since 2007. The number of companies on AIM has fallen from 1,694 at the end of 2007 to 612 now.
Colin Wright, our UHY UK Group Chairman, commented:
AIM has continued to shrink over the last two decades primarily because PE funds and corporates see AIM listed companies as undervalued Those acquirers see the strong prospects of AIM companies and have been willing to pay more than institutional investors have been willing to pay for those growth companies.
Whilst that is a great compliment for AIM companies the gradual erosion in the size of AIM is not helping it attract new listings. The takeover of many of AIM’s best companies makes AIM seem far less dynamic than it is. Perhaps it is time to consider whether it is too easy to take over a UK listed company compared to other exchanges such as the NYSE or Nasdaq.
Should boards in the UK have more autonomy to resist bids – can that be achieved without there being too negative an impact on shareholder rights? As the UK stock markets continue to shrink, it seems right to have this debate.
Reforms that have taken place to allow dual class shares could be seen as one step that might, in time, reduce the number of opportunistic takeovers.
Other reasons for AIM delistings
The second biggest reason for AIM delistings was because a company’s strategy had failed – for example they had failed to find a suitable acquisition or their failure to deliver growth meant they could no longer justify listing on AIM. Failure of strategy accounted for 303 or 14% of all delistings in the last 20 years and 15% in the last year.
Financial stress or insolvency was responsible for 434 or 20% of delistings over the last 20 years but just 13% of those in the last year. Financial stress and insolvency has been falling as a cause of delistings over the last two decades as the quality of AIM companies improves. For example, delistings caused by financial stress have fallen from 25% of all delistings in the five years from 2011-2016 to 18% in 2021 -26.
AIM’s reform programme welcomed
Colin Wright says that part of the reason why AIM delistings are seen as so problematic is that the companies leaving AIM are not being replaced by enough new listings/IPOs.
Colin explains that the LSE has introduced some reforms to lower the cost of being listed on AIM but that the reform process may need continue with the removal of more red tape.
“AIM and the LSE should be congratulated on getting the ball rolling on reducing costs and AIM regulations – it is an important area. We are very supportive of AIM taking and ambitious approach to these reforms. We need to make it attractively easy to undertake an IPO on AIM. Delisting are only really a problem when they aren’t be balanced off by new listings on AIM.”
*Year end December 31 2025
