Lawyers AIM costs too low

Flotations: Solicitors 'naive' about the costs of companies entering the AIM market

Solicitors wrongly estimating the legal cost of entering the Alternative Investment Market (AIM) are discouraging clients from making the move, it was suggested this week.Max Audley, a partner at City firm Hobson Audley, was speaking following publication of a survey carried out by his firm, in conjunction with accountants HLB Kidsons, which found companies floating on AIM are pleased with their decision - despite complaints about the size of the legal fees - together with a fall in the number of companies considering admission.The survey of 50 AIM companies and 150 potential entrants found that 80% of AIM companies saw it as an attractive option, with 78% saying it was either quite easy or very easy to enter.

But of those surveyed, 30% of potential candidates said they knew nothing about AIM, and around 40% of those aware of the market said they thought admission would be too difficult.

Low turnover of shares was another off-putting factor.This has contributed to a fall from 62% to 26% in companies which are considering flotation over the last year, although this is still higher than the 13% that said they would consider admission to the main market.

Mr Audley said although most companies that successfully floated took the view that it was 'well worth it', many were dissuaded because of complaints about lawyers underpitching how much it would cost to float, then increasing their charges.

He said companies thinking about floating on the AIM hear stories about the overrun on legal fees.

'Solicitors seem to have been a bit naive about how much it all costs,' Mr Audley said.

'They need to be giving realistic quotes for the job, and both companies and lawyers need to take a realistic view about the amount of work that goes into a move like this.'Paula Rohan