Tom Harrold is a member in the international law firm of Miller & Martin in Atlanta, part of the World Law Group. 

It’s no surprise that today more U.S. companies are looking for capital through a public offering. What may be surprising is that many of those companies are finding that capital in London.  

The London Stock Exchange in 1995 established the Alternative Investment Market (AIM), a unique way for emerging growth companies throughout the world to access growth capital with a public offering. Since London is now a virtual magnet for money and has the deepest pool of international capital looking for a good investment, AIM provides a fast-growing U.S. company with an ideal situation— wholesale, institutional investors with mountains of cash who are not happy with a one-third of 1 percent interest rate on money-market accounts.  

The beauty lies in its efficiency. Going public under AIM can be accomplished in six or seven months at approximately half the cost of a NASDAQ listing, all without being overburdened with Securities and Exchange Commission and Dodd-Frank rules and regulations. The AIM Program is regulated solely by the London Stock Exchange with the regulatory requirements contained in a 32-page booklet. For fast-growing U.S. companies, the AIM Program fills the void caused by bank reluctance to lend significant sums to young companies with a short or unproven history of revenue, venture capital management intrusion and the very high cost of taking a company public in the United States.  

Since 1995, there have been 3,578 companies listed on AIM raising over $90 billion. The typical AIM investor is an institutional fund and not a retail mom and pop 401(k) investor. A company listed on AIM will normally attract 10-15 institutional investors who will acquire 25-45 percent of the issued and outstanding stock of the company so that the original owners do not surrender management control. In many cases, seats on the board of directors are not required. These investors typically are passive; they back the entrepreneurial spirit of the management team and do not interfere with day-to-day company operations. 

The listing of an emerging growth company on AIM is typically an intermediary phase before going for a full-blown listing on either the New York Stock Exchange or the London Stock Exchange (or both). This is when the AIM institutional investors realize substantial profits on their backing of a well-managed entrepreneurial, fast-growing company with a defined market niche.

This is not to say that the AIM listing is a solution for a struggling company desperate for new capital. The self-regulating vetting necessary to be listed on AIM is very thorough and only 15% of the companies who express an interest in AIM actually are listed. The ideal company to take advantage of an AIM listing will have a bright future with current revenues of $10 million to $20 million, a business history of three to five years with a very solid management team. The AIM listing will efficiently provide such a company with $15 million to $20 million of new capital.  

The view from London is bright. Kris Rogers is a capital markets partner in the London office of Wragge Lawrence Graham & Co. LLP, the No. 1 law firm for AIM clients by market capitalization, with more than 450 AIM deals since the start of the program. Here’s what he says about AIM: 

”Since the end of the 2008 financial crisis we are seeing and helping more and more well-managed U.S. companies with bright and profitable futures looking to join the 64 North American companies who have already taken advantage of the unique opportunities AIM has brought to their businesses.”

Tom Harrold is a member in the international law firm of Miller & Martin in Atlanta, part of the World Law Group.  He has a 35-year history in helping international companies doing business in this region. 

For more information on the AIM Program, contact Kent Antley, Senior Partner in the Atlanta Office of Miller & Martin PLLC at 404-962-6435.