Two months later and this seems very optimistic indeed; the performance of the FTSE 100 over the last year has seen a fall of more than 30 per cent to 3,842, and AIM has been in freefall with a 62 per cent fall to just 395.

It was less than a year ago when articles were reporting on the number of AIM Listings per month and the level of funds raised whereas the press today is constantly reporting company failures and de-listings – AIM alone has seen 40 companies quit the public arena in the last two months, some more gracefully than others.

Some might say that the recent trend in de-listings is a sign that the economy and AIM market in general is worsening. There is no disputing that there is a number of small start up/pre-revenue companies on AIM that listed for all of the right reasons over recent times but were always small, high risk companies that inevitably would have to come back to the market for additional funds for working capital and expansion. 

It is these companies that have suffered from the current banking crisis and the knock on effect that the availability of additional funds from individuals through to VCs has all but dried up. This has lead to what could be perceived as great potential businesses currently on AIM having to delist due to the lack of availability of funds.

There are also companies that perhaps with the benefit of hindsight might have benefited from staying private or listing on the PLUS market. There have been calls from certain parties that the current regulation for listing on AIM isn’t effective enough and that with tighter regulation, such admissions would not have occurred.

One of the main advantages of AIM for fast-growing entrepreneurial businesses is that the regulation has been set at an appropriate level that allows smaller companies to list but without having the increased regulation and reporting requirements of the full market or indeed some overseas markets – it is also very easy to forget the remarkable growth that AIM has enjoyed since its inception 13 years ago and the number of successes there have been over that period.

AIM most certainly is a market to be reckoned with but like all other markets, it is undergoing change in the current economic cycle. It has always been attractive to overseas companies – and the current sterling exchange rate has meant more companies are exploring listing.

In order for AIM to improve, the key is to restore investor confidence and improve the availability of funds. This is always easy to say but achieving it is a different matter. I am sure AIM will see further delistings in the coming months along with mergers and consolidations, with only a handful of new listings or fund raisings. The market will, however, remain robust and seen as one of the leading markets as and when confidence returns.

Markets tend to look between six and nine months ahead and barring any unforeseen disasters, most economists suggest the first signs of recovery may begin to emerge at the end of 2009 or the beginning of 2010. This implies that the markets could start to pick up early this summer. Coupled with this, the historically low interest rates and the fact that people are spending less and saving more than they have done in many years, some of this money will inevitably find its way into the market.

*Ian Cliffe is a partner at haysmacintyre

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