At the start of this month, The Lawyer reported that Pinsent Masons has hung on to its position as the law firm at the top of the AIM rankings. What does that mean, and why should you care?
So what are these AIM rankings all about?
Every three months, the boffins over at Adviser Rankings publish a table of law firms by their total number of AIM-listed clients.
They also break down the data in different ways. So, want to see which firms work for the biggest AIM-listed companies? That’s no problem – just check out the market capitalisation table.
You can also rummage around to see which law firms advise most companies in the FTSE AIM UK 50 and the FTSE AIM UK 100. In plain English, that’s the 50 and 100 biggest AIM-listed businesses by value.
Wait, wait… the AIM market is what, exactly?
The AIM market used to be known as the Alternative Investment Market. Sometimes you’ll also hear it referred to as a junior market or stock exchange.
It’s essentially a sub-market of the London Stock Exchange (LSE), which is specifically designed for smaller companies that want to float shares.
It is more flexible than the main list of the London Stock Exchange, which has a whole host of demands and regulatory requirements that its members need to sign up to. For example, companies must be over a certain market capitalisation, and they need to issue above a particular number of shares.
The AIM market is much more easy-going, in a bid to help smaller companies to raise the capital they need to grow healthily. It has tended to be popular among companies in high-growth areas like technology, industrials and biotech.
Another feature specific to the AIM market, unlike its bigger brother, is the prominent role played by exotically-named Nomads. Formally known as nominated advisers, these players are appointed to help young companies to find their feet on the junior stock exchange. They help companies to navigate the various rules and regulations put in place by the LSE, and ensure that it doesn’t get delisted.
Nomads, which include the likes of Goldman Sachs, Cantor Fitzgerald and Numis, are placed on a formal register of nominated advisers. They’re generally investment banking firms with experience of bringing companies to the market.
A great starting ground, many AIM companies go on to join the LSE’s main market. And plenty of companies already listed on the primary market also move in the opposite direction, taking advantage of the AIM market’s fewer regulatory hurdles.
The AIM market currently features some names you’ll probably recognise, like fashion retail site Boohoo.com and professional services company Quindell. But there are also plenty that you’ve probably never come across, such as IT company Iomart Group and pallet manufacturer RM2 International.
So, these rankings. I notice that there’s a real mix of firms in the top 15, from giants like DLA Piper and Norton Rose Fulbright to tiny firms I’ve never heard of like Kerman & Co. And the magic circle are not represented at all? What’s that all about?
All sorts of firms advise businesses that are listed on the AIM market, although it’s true that the magic circle players are notably absent from the rankings. That’s largely because advising these sorts of clients isn’t really their cup of tea.
The AIM market is home to budding young companies with an eye on long-term growth. These businesses are often relatively small – too small to warrant their own internal legal team. So their non-legal executives tend to build strong relationships with their external counsel.
And once a firm gives a small company a helping hand with their AIM listing, they’re often in for the long haul – sometimes even helping them to graduate up into the main market.
The whole process is quite different to acting for huge FTSE-listed conglomerates, which generally tend to have masses of in-house lawyers of their own. People at these companies often feel that they need to hire top-tier firms as external counsel to stay in their boss’s good books. As the old saying goes, no one ever gets fired for hiring Slaughter and May.
Bigger companies are also under more pressure to review their legal advisers regularly, and they have larger legal budgets to blow.
Most of the firms in the latest Adviser Rankings table would generally be described as being in the mid-market. Norton Rose Fulbright is an obvious exception – interestingly, that firm has slipped down the AIM rankings in recent years as it has set its eye on more profitable instructions. In 2007, the pre-merger Norton Rose came top of the rankings with a total of 64 AIM clients. Today, it is in 13th place, with just 27.
So why do some firms have loads of AIM clients, then? What does it tell me about their business?
A strong AIM practice is a sign that a firm has a relatively strong corporate practice and is dedicated to advising a smaller, growing client base.
Seeing as a number of AIM-listed companies fall within the financial services, industrials or consumer services sectors, it could also indicate that these are particular hotspots for a firm.
Most firms disclose to Adviser Rankings which AIM-listed clients they work for, so have a gander here to dig around their website and see which firms advise what sort of companies.
|AIM rankings, Jan 2015|
|Rank Jan 15||Rank Oct 14||Firm||Total AIM clients (Jan 15)||Total AIM clients (Oct 14)|
|4||5||Wragge Lawrence Graham & Co||39||36|
|6||9||Kerman & Co||36||32|
|11||11||Berwin Leighton Paisner||29||28|
|13||12||Norton Rose Fulbright||27||27|
|15||X||Charles Russell Speechlys||26||X|
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