Hammonds adopts eye-catching strategy to drum up some fresh mid-market business

Even for a market that has suffered a torrid 18 months, Hammonds' recent offer to delist companies from London's Alternative Investment Market (AIM) for a £5,000 fee seems awfully symbolic – and not in a good way. After all, this market had not so long ago been one of the most lucrative for mid-market advisers. That is hard to square with Hammonds' recent move to send out flyers to at least 20 nominated advisers offering to delist AIM companies with a market cap of less than £20m for a fixed fee of £5,000.

At first glance, it is hard to see how any top 50 law firm can turn a profit on those figures. However, Hammonds' latest initiative is shrewder than it sounds, as it is aiming to use the delisting as a foundation for future relationships along the realms of providing commercial, employment, pensions and tax advice.

In addition, the small print will see a number of add-on prices if the company wishes to do anything on top of the delisting, such as share buyback schemes, tender offers and capital reductions – common practice given that 75% shareholder approval is required for a straightforward delisting.

Hammonds corporate partner Giles Distin (pictured) comments: "It would not be appropriate to ask for a high legal fee on a delisting and we hope the fee structure will be attractive to new clients. In this market, relationship-building is as important as fees themselves and we want to put ourselves in as strong as position as possible for when the market improves to conduct not just the corporate work but carry out other legal needs."

In response, AIM lawyers give Hammonds credit for commercial invention, even if not everyone is convinced it is the right road to travel. DLA Piper capital markets head Alex Tamlyn says: "They may find the odd nugget of gold, but there is going to be a lot of gravel to trawl through. Is the time and processing of delisting companies going to be worth it for those few companies that retain them? It is not a foregone conclusion."

Still, it remains a fairly depressing move for the market in general. Since its launch in 1995, 2008 was one of the worst years for AIM with only 114 admissions to market, compared with 284 during 2007 and 462 during 2006. The total number of companies listed on the exchange also fell – dropping from a peak of 1,694 at the end of 2007 to 1,550 in December 2008.

So where does this leave AIM? No-one expects a return to the glory days of 2005-06 for a long time but AIM veterans all maintain London's junior market is still attractive and will remain to be so in the future. Many point to overseas companies maintaining an interest in AIM. The exchange is expected to decrease dramatically in size but others view the drop-off as part of a wider evolution of a maturing exchange, seeing those companies that should not have listed in the first place fade away. The picture portrayed is one of quality as opposed to quantity – even if this end looks to be achieved through a fairly brutal, Darwinian form of evolution. All of which suggests that AIM will be a good place for advisers that stick it out for the long haul, but the emphasis remains on long.

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