AIM's best advisers
Article Date: Aug 08 2005
For companies eyeing flotation, perhaps the greatest headache is securing a team of advisers to guide you through the IPO process. Fortunately, the level of expertise available remains reassuringly high, as this year’s Growth Company Awards prove.
Now in their fifth year, the Growth Company Awards strive to discover what AIM companies genuinely think of their advisory teams. On balance, the news is good, with more than two-thirds of the 311 AIM companies surveyed indicating they were satisfied with the level of service offered by their nominated advisers, brokers, accountants and legal advisers.
Nominated advisers, or ‘Nomads’ as they are otherwise known, are instrumental in assessing a company’s suitability to join AIM and all companies must retain a Nomad for regulatory purposes during their life on the market. This year’s research, conducted by Business XL’s sister publication Growth Company Investor, found that an impressive 75.9 per cent of AIM firms view the service offered by their nominated advisers as being either ‘Good’ or ‘Very Good’. Though slightly down on the 82.8 per cent approval rating of last year, this nonetheless represents the second highest satisfaction level reported in five years. Responses in relation to accountants and lawyers were even more upbeat, with satisfaction scores of 83.3 per cent and 84.8 per cent awarded respectively.
As in previous years, brokers fared worst, although 67.2 per cent of respondents still rated their broker’s performance as ‘Good’ or ‘Very Good’ and less than ten per cent described their broker’s efforts as ‘Poor’ or ‘Very Poor’ – significantly down from the 15.9 per cent in 2003.
Variations remain
In spite of the almost overwhelmingly high scores, however, there remained some stark individual differences both within and between the separate adviser categories.
Among the nominated advisers, for instance, KBC Peel Hunt, which was named best adviser for the second year running and picked up the award for best broker too, saw only one of its 22 responding clients rate its service as anything less than ‘Good’, with that client opting for a ‘Neutral’ rating instead. Rivals Arbuthnot and Williams de Broe, by way of contrast, each received a mark of ‘Neutral’ or below from at least half of their responding customers. Brokers received similarly diverse ratings.
Over in the solicitor category, meanwhile, not one of the five shortlisted firms – DLA, Memery Crystal, Osborne Clarke, Pinsent Masons or eventual winner Halliwells – received a score of less than ‘Neutral’. For the fifth year running lawyers were the most popular advisers too; as a whole, receiving a description of ‘Very Good’ from an outstanding 42.5 per cent of firms. Just 3.6 per cent of companies described their legal adviser as being either ‘Poor’ or ‘Very Poor.’
Experience essential
For those capturing the adviser awards there seems little debate over what constitutes a good AIM adviser.
‘Experience of having gone through the float process before is key,’ Nigel Brown, a partner at Halliwell’s corporate team, explains. ‘There is simply no substitute for this as the problems you encounter will crop up again and again and it becomes much easier to overcome them.’
‘I think you have to have the experience to advise on the hoof,’ chips in Adam Hart, corporate financier at KBC Peel Hunt. ‘It’s amazing that the same topics arise time and again, regardless of the sector a company operates in. Products may vary, but the issues businesses face on flotation do not.’
‘Having worked with more than 140 AIM clients I think we’re able to add much to the IPO process,’ adds Chilton Taylor, head of capital markets at accountancy firm Baker Tilly, which scooped the accountant of the year award for an unprecedented third consecutive year. ‘AIM is very much a major focus for us and though we obviously have a professional job to do, we try to be accessible and offer the help and advice our clients need.’
Defending the brokers
As to why brokers tend to be viewed less favourably than the other types of advisers involved in the flotation process, Hart is sanguine. Like many other AIM nominated advisers (fellow nominees Charles Stanley and Numis included), KBC Peel Hunt offers broking services too and, though among the perceived cream of the crop, its approval ratings also fall sharply when acting in the latter capacity.
An impressive 95 per cent of the company’s clients rated its nominated adviser service as being either ‘Good’ or ‘Very Good’. When it came to broking this figure dropped to 74 per cent.
‘It is a horribly difficult job to be a broker,’ Hart concedes. ‘Most companies feel as though you’ve priced them too low, screwed them over with your fees or whatever else and if a share price is low then it can be seen as your fault. What companies need to realise is that brokers have two clients, the investor and the company, the challenge comes in balancing the interests of these two groups.’
As Growth Company Investor’s research reveals, however, sub-standard adviser performance is rarely tolerated. One respondent, for instance, commented that ‘we were not satisfied with the performance of our IPO team and have now changed them all,’ while another – after rating their long-standing nominated adviser and broker’s efforts as ‘Poor’, indicated that ‘we have recently changed our brokers and, though it is too early to say how well they perform, their analyst, at least, seems very good.’
Other winners
Away from the adviser categories, Sportingbet was among the other major winners at the Growth Company Awards, which were held in late June at London’s Barbican Centre. Having witnessed a trebling of its market valuation inside of 12 months and recently reported a 154 per cent rise in pre-tax profits (to £32 million) during the nine months to April, the online betting service provider was named AIM Company of the Year.
Small Cap Fund of the Year went to Framlington UK Smaller Companies, Close Brothers secured the title of VCT Fund Manager of the Year for the second time in three years and Charles Stanley’s Peter Ashworth was named AIM Analyst of the year, fighting off stiff competition from runner-up Malcolm Morgan of Investec.
GROWTH COMPANY AWARDS WINNERS
AIM Company of the Year
Sportingbet
Sponsored by Seymour Pierce
AIM Accountant of the Year
Baker Tilly
Sponsored by Cobbetts
AIM Lawyer of the Year
Halliwells LLP
Sponsored by Hichens Harrison
Small Cap Fund Manager of the Year
Framlington UK Smaller Companies
Sponsored by JM Finn
AIM Broker of the Year
KBC Peel Hunt
Sponsored by Rosenblatts
VCT Fund Manager of the Year
Close Brothers
Sponsored by Plus Markets (OFEX)
AIM Adviser of the Year
KBC Peel Hunt
Sponsored by Addleshaw Goddard
Analyst of the Year
Peter Ashworth, Charles Stanley & Co
