Flotations on AIM

1 Day In-House Training Course

This 1-day, in-house training course covers all the important preparatory, marketing, regulatory, legal and taxation requirements for arranging and implementing a company’s flotation on the Alternative Investment Market (“AIM”).

Participants will receive practical and detailed guidance on all stages of the process from the initial review of a company’s eligibility and suitability for flotation through to its quotation on the London Stock Exchange.

The role and responsibility of each of the professional advisers will be described and, in view of the onerous responsibilities of the directors of a public company, the advantages and disadvantages of a quotation will be fully evaluated.

Course Outline

  • The Best Junior Stockmarket in the World

    • Where Does AIM Fit In? – PD, FSMA, FSA, UKLA, LSE, RIE, Nomad
    • The AIM Rules – the LSE requires very few formalities
    • Advantages and Disadvantages – financing growth vs. greater accountability
    • Tax Status of AIM – EIS, CGT, VCTs, inheritance tax, corporate venturing schemes
    • Suitability for a Quotation – don’t start unless you are sure
      • Fundamental Questions – what will satisfy a Nomad?
      • Market Related Questions – how will an AIM quote benefit the company?
      • Business Related Questions – what are the commercial justifications for a quote?
    • The EU Prospectus Directive – the nut has escaped the sledgehammer
    • Codes of Conduct – UK corporate governance code, takeover code, announcements
  • The Parties and Their Roles

    • The Selection Process – evaluate track record and experience to get the ‘A’ team
    • Initial Discussions with the Nomad – valuation, type of investors, company visit
    • The Regulatory Responsibilities of the Nomad – LSE gatekeeper & quality controller
    • The Nomad as co-ordinator – managing conflicting interests & transaction manager
    • Stockbrokers – acting as Nomad?, producing research
      • Before the Issue – test marketing, pricing, underwriting & selling
      • After the Issue – information dissemination, preservation of liquidity
    • Accountants – long and short form reports, working capital memorandum
    • Lawyers – solicitors to the issue and solicitors to the company or just one firm?
      • Verification of the Admission Document – commercial arguments with the lawyers
      • Legal due diligence – checking for financial, legal & operational problems
    • Other advisers/suppliers – registrars, receiving bankers, PR, valuers, actuaries & printers
  • Flotation

    • Methods of Flotation – offer for sale, offer for subscription, placing, introduction
    • The EU Prospectus Directive – ‘offer to the public’, exempt offers, exempt securities
    • Contents of the Prospectus – rules for AIM admission documents
      • Compensation for False/Misleading Statements – protection provided by risk factors
    • Valuation – using DCF, NAV, PERs & enterprise value to fix a guide price
    • Building the Investment Case – persuasive reasons for investors to buy the shares
    • Initial Marketing – formulating a consistent message, advance publicity
    • Formal Marketing – briefing the salesforce and managing the roadshow
    • Structuring the Shareholder List – institutional and private investors, free float
    • Pricing & Allocation – achieving the optimum price with a good shareholder mix
    • Post Flotation – maintaining good relations with shareholders for further financing

Course Notes, Slides and Exercises

Participants will receive a booklet containing copies of 17 slides and 55 pages of very comprehensive notes. Each slide will cover a number of related topics and the accompanying notes will support the content of the course to be delivered by the trainer.

During the course of the day, participants will undertake one or two exercises (problems) in groups of two or three (depending on the size of the class) which will involve considering what advice should be given to a client in particular circumstances. Participants will discuss the exercise with each other and then with the trainer and will receive a written answer to the problem.

Exercise 1

Your client has decided to float his company on AIM. It has been agreed that the directors may sell 10 per cent. of their holding as part of the flotation. You advise on how many new shares need to be issued to raise the cash required to fulfil the company’s development plan. You then calculate the enlarged share capital, the projected market capitalisation and a pro forma PER assuming repayment of debt.

Exercise 2

Your client’s stockbrokers have agreed to underwrite a rights issue at a 20 per cent. discount. You calculate how many shares will need to be issued to raise the required funds, compute the theoretical ex-rights price and comment on how shareholders can deal with their rights.

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