Number of takeovers of AIM companies down 26% over the last year

Publications that covered this story included The Independent and City AM.

  • AIM takeovers a third of pre-credit crunch peak
  • Improved financial health of AIM companies has protected them against opportunistic swoops….
  • …but doubling of takeovers in recent weeks could suggest revival of M&A appetite

The number of AIM companies being taken over has fallen by 26% over the last year from 66 in 2011/12 to 49* in 2012/13, its lowest level in seven years, according to our research.

Our research suggests that the current level of M&A activity on AIM is now only a third of its pre credit crunch peak of 149 takeovers in 06/07 (See graph).

The below graph explains that current M&A activity on AIM is also lower than at the height of the recession when there were over 80 deals a year. The collapse in AIM company share prices caused by the recession led to a wave of opportunistic bids by private equity investors and trade buyers for AIM companies.

AIM has recovered from its nadir in 2009 when the AIM 100 index reached a low of 1,754 points, and has since almost doubled to reach 3,442 points.

Laurence Sacker, corporate finance partner in London comments: “The share prices of many AIM companies have rallied since the depths of the recession when they were trading at a discount to their net values, and so were attractive targets for takeovers.”

“Prices of some AIM companies were so depressed that bidders were looking to snap up AIM companies with the option of selling off the assets for a quick profit.”

“Now that AIM share prices have rallied that bargain hunting has eased off.”

However, the research suggests that recent weeks have seen a revival of M&A activity on AIM, with 10 successful takeovers completing in the three months to the end of June.

Goldman Sachs have reported a 71% increase in announced M&A activity across European stockmarkets in June compared to the previous month.

Laurence adds that: “More confidence in the economy should encourage corporates to use some of the cash on their balance sheets to make takeover bids as well as encouraging more activity by private equity buyers.  We are certainly seeing early signs of that.”

“However prospective purchasers are now increasingly likely to need to offer a significant premium over current share prices.  That’s great news for those AIM investors that had the confidence to sit tight through the recession.”

Fall in the number of takeovers on AIM from 06/07 to 12/13 (Year to 30 June 2013)

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*Year ends to 30 June