Lots of venture investors are looking to IPOs for portfolio companies on the AIM as one way to get some liquidity for their struggling private portfolio. There is a new study out showing that AIM IPOs suffer badly in the years after an IPO, making it a lot less palatable to VCs treating AIM as anything other than a fund-raising event:
After two years, AIM companies lost 57%, versus a positive 12% for Nasdaq. After the third year, returns for AIM companies fell to a negative 65% versus a negative 26% for Nasdaq. After the fourth year, AIM IPOs were down 75%, while Nasdaq ones were down 33%. At the end of the fifth year, AIM values recovered somewhat to a negative 60%, while Nasdaq companies recovered to a negative 19%.
Indeed, Nasdaq companies tend to be more richly valued than AIM ones. Analyzing tech companies with more than $20 million in revenue, Gebaide found that the median AIM software company is valued at an Ebitda multiple of 7.1 versus 13.2 on Nasdaq, and that is despite a steeper growth rate for AIM software companies …