There has been a deafening silence in the traditional public markets in the last two years.  Why?  Because small to medium size businesses are seeking capital outside of the U.S.  The IPO scene has been altered because of technology advances and the maturity of new foreign markets.  US and foreign companies are following the money trail to places like the London Stock Exchange’s AIM market.  Deals are getting done there that could never attract an underwriter in the U.S.  AIM provides a cheaper more effective alternative with fewer liquidity requirements. 
 
Small companies can no longer get underwriters to do their deals because there are few out there who would be willing to participate.  During the dot.com boom there were more than 100 small investment banks that would underwrite IPO’s, but the NASD clamped down on them and put most of them out of business.  There are now a half a dozen investment banking firms where there were 100 before. 

The London Stock Exchange’s AIM is attracting many small U.S. companies’ IPO’s because more than 50% (890) of its 1,578 registered companies have a market cap of less than $50 million.  More than 20% have a market cap of $10 million.

Obviously someone, other than our own regulatory bodies, believes that investors want the opportunity to invest in small companies.  I wonder how long it will take for the SEC or some other governmental body to wake up and realize foreign markets are eating our lunch?

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