The devaluation in sterling has created a short to medium term opportunity for overseas companies to invest in sterling priced companies. Overseas investors are reassessing companies that may have looked strategically interesting but too pricey pre Brexit to see if they could now work.
The resultant consolidation, reduction in head office costs and financial reporting obligations, particularly for smaller cap stocks, mean earnings synergies should be immediately available.
Some smaller cap stocks have also been traded on AIM for sometime and are quite illiquid, so again an opportunity to realise value has proved attractive to long term institutional shareholders.
While concern has been expressed that the number of takeovers is "bad" for the AIM market, in truth these deals show the market is working well in the less regulated liberal regime the UK prides itself on.
What AIM should do now is emphasise the institutional money available to younger, fast growing companies looking for growth and find a whole lot of new companies that can benefit from AIM. Hopefully in this economic cycle AIM can attract UK based technology companies which may otherwise look for private venture capital, but instead who can tap institutional monies to invest in future growth.
Ready, Aim, acquire: Junior market takeovers boosted by fall of sterling in 2016