Is the three-year slump on London's once-feted junior market near an end?

Ask a corporate partner specialising in work on London's Alternative Investment Market (AIM) to describe 2009 and "horrendous" and "not a good year" are some of the milder descriptions you're likely to hear. Looking at the statistics it is easy to see why, as the market saw a dismal tally of just 36 admissions, with the number of initial public offerings (IPOs) barely scraping double digits at just 13.

From that base, staging any kind of comeback is going to be fairly easy but, even allowing for such a poor comparison, advisers – both legal and financial – are more positive about 2010. This is just as well – given that the once white-hot AIM hit its slump months before the onset of the credit crunch in 2007, a recovery can't come soon enough for AIM advisers. Although the market has yet to see a flotation so far this year, following a 12-month period that saw the market virtually closed to IPOs, partners report that there are now junior companies queuing up to try and list, with some firms claiming to be at least four or five times as busy with potential new offerings than they were this time last year.

Given the total number of deals in 2009, any predicted increase is hardly likely to equate to a massive uptick in dealflow for those firms best known for AIM work, such as Pinsent Masons, LG and DLA Piper, but it will clearly make it easier for lawyers to fill their days. This will perhaps avoid the need for further firms to follow Hammonds' symbolic decision in early 2009 to offer bargain-basement de-listings from the market for a flat fee of just £5,000.

In particular there is an expectation that, given the problems the private equity sector has seen over the last year or so, there could be a spate of new AIM activity coming through buyout houses trying to exit parts of their portfolio on the market, rather than through trade sales. As LG corporate partner Tom Nicholls says: "There's certainly greater confidence, but we've yet to see any flow of IPOs coming through. There's anticipation that there will be some private equity players looking for an exit and the resources sector is likely to be strong."

And while it could take several months for many of the potential floats to come off, there is both consolidation and additional fundraising activity keeping people busy in the meantime. Indeed, even though 2009 was the worst year for admissions since 1995 and a flurry of de-listings helped take the total number of companies on the market down to 1,293 – the lowest level since 2004 – the total amount of money raised was up on 2008, as companies moved to take advantage of the rebound in equity valuations. Some £5.5bn was raised on the market in 2009, with all bar £740m coming through further fundraisings.

Even allowing for further de-listings from AIM and for concerns about new and reduced standard listing options for the main London Stock Exchange making junior markets such as AIM less attractive, there is a general consensus that the market will have better fortune this year.

David Stevenson, Pinsents corporate finance partner, believes: "We will see an incremental increase in activity. It's a function of pent-up demand caused by new issues put on ice during the economic crisis and will be accentuated by private equity houses now having an appetite for considering exits on AIM."

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