AIM M&A on the rise with biggest quarter for deals in over two years

Publications that covered this story include Daily Telegraph, Daily Express, City AM 6 October 2014
  • 13 M&A deals on junior market as bigger rivals eye AIM companies
  • AIM insolvencies at lowest level since pre-crunch

The Alternative Investment Market (AIM) has had its biggest quarter for M&A activity in over two years as AIM companies become attractive takeover targets.

Our research shows that the three months to the end of September saw 13 M&A deals involving AIM companies, the highest number since the first quarter of 2012. This compares with five deals in the second quarter of 2014 and six in the third quarter of 2013. There have been a total of 36 M&A deals on the junior market in the past year.

We add that there has also been a major return to ‘high-quality’ M&A activity in the junior market. It says that low-priced acquisitions of struggling companies formed a significant proportion of M&A deals in the aftermath of the credit crunch.

M&A deals on AIM in 2014 include the £448 million purchase of property entrepreneur Nick Leslau’s Max Property fund by private equity giant Blackstone Real Estate, and the £63 million buyout of business software developer Pilat Media by Israeli broadcast software provider SintecMedia.

Laurence Sacker, Partner, comments: “AIM hasn’t seen this level of high-quality M&A activity since the credit crunch.”

“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.”

“A good number of the market’s M&A deals in recent months have been larger competitors seeing AIM companies as important strategic targets. Many have paid premiums on their share prices in order to complete those acquisitions.”

“Successful exits like these can only make the market more attractive to companies considering floats, and to potential investors. Keeping M&A deals flowing is just as important a part of a healthy market as maintaining the IPO pipeline and market liquidity.”

 AIM insolvencies hits lowest level since pre-crunch

The number of insolvent companies leaving AIM has also hit its lowest level since the credit crunch. Just 18 companies delisted from AIM in 2013/14 due to financial stress and insolvency, compared with 82 at the height of the recession in 2008/09.* More than 1,000 companies have left the market since the credit crunch.

At the peak of the recession, more than half of companies leaving AIM were doing so because of insolvency. In the past year, by contrast, M&A has become the single biggest reason for delisting, representing 43% of all departures from the market.

Comments Laurence: “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. Insolvencies haven’t been this low since pre-Northern Rock.”

 IPOs see summer dip but pipeline looks healthy

UHY Hacker Young says that AIM IPOs have been affected by a slight summer lull following several robust quarters for new listings. 18 companies joined the market in the three months to the end of September, raising £190 million, the lowest amount raised since the first quarter of 2013.

We add that the pipeline of AIM IPOs looks healthy, with online advertising platform Crossrider raising £46 million on 30 September, in the junior market’s biggest float since April. Five further IPOs are slated for the first three weeks of October.

 *Year ending 30 September.