Market Strategy: only 11% of directors initially approach a lawyer, corporate survey reveals

Company directors appoint a broker or financial PR adviser before selecting a law firm when looking to float their business on the Alternative Investment Market (AIM), research has revealed.


The survey of directors who have already floated their companies on AIM - conducted by broker Corporate Synergy - showed that nearly half (45%) appoint brokers first and regard them as having the lead role in the process.


A further 37% would hire a financial public relations adviser first, while only 11% said they initially approach a lawyer or a separate nominated adviser (nomad). None said they would hire an accountant first to advise on an AIM float.


Peter Jay, who heads the AIM group in the corporate team of London firm Beachcroft Wansbroughs, said: 'I'm surprised it's only 11%. Increasingly, the first port of call is the lawyer. We are regarded as being more independent than other parties involved. We have a unique position and clients are increasingly recognising this.


'Corporate lawyers work in a number of different areas and have good knowledge of the markets. We can use this to advise on which brokers would be suited to a particular type of company and help the directors choose the right nomad for them.'


Mr Jay added: 'I can only think of one AIM flotation that we have advised on in the last three years where we were not the company's first port of call when they were considering flotation.'


But Nick Heather, a partner in the corporate finance team at City firm Lawrence Graham, said he was not surprised by the findings. 'I suspect the first person they [the directors] speak to is their auditor or accountant and the auditor or accountant then tells them who to approach next.'


He said: 'Only occasionally have companies we act for approached us first and when that happens we advise them to see a broker or nomad, because if they are not willing to take the company on, there is no point getting others on board.'


The Corporate Synergy study also found that more than two-thirds of directors (67%) preferred to assemble their own team of advisers, while a quarter (22%) wanted their lead adviser to make recommendations.


It also revealed that directors were taken aback by the length of time a successful flotation takes, with four in ten saying that they wished they had started the process six months earlier.