The firm said that AIM M&A deals rose to 56% of all takeovers, up from the 46% reported the prior year.
Private equity firms have reportedly been a “big driving force” in AIM M&A deals this year. In 2018/19, only six out of 22 AIM M&A deals were backed by private equity, while there were only 14 takeovers of companies on the main market in 2019/20.
Private equity funds have become “more comfortable” in acquiring AIM companies over the last few years, however, as the market has improved governance procedures since the last financial crisis.
UHY Hacker Young said that AIM is likely to “continue to be a hunting ground” both for private equity funds and corporate acquirers.
Daniel Hutson, partner at UHY Hacker Young said: “Private equity firms have excess cash to invest and are on the hunt for value wherever they can find it. Clearly they are seeing a lot of value in AIM companies that still remain off limits to many institutional investors.
“Whilst AIM now has a number of heavyweights like ASOS, Fevertree, Chi-Med and Boohoo that would make it into the FTSE100 or FTSE250 it also has a long tail of companies that don’t get the analyst coverage they deserve. Private equity companies have been willing to put their analyst teams to work to identify those AIM companies that they think traditional investors are undervaluing.”
He added: “Overall the AIM market yields 1.2%, which is low compared to the mature companies in the FTSE100 but shows that the time when AIM was a synonym for loss making and cash guzzling is long gone.
“Brexit will take some heat out of the market towards the end of the year as we wait to see what the new post-Brexit world looks like. However, the overall popularity of AIM companies is likely to continue as we go into 2021 and beyond.”