Enterprise values of software companies on AIM prove resilient in the second half of 2015

Technology companies trading on the Alternative Investment Market (AIM) raised over £200m in the six months ended 31 December 2015 – £35.5m from four IPOs and £174m relating to secondary fundraisings from 30 companies. This compares with over £700m raised in the first half of 2015 – a sharp decline, although the first half was skewed by the £450m raised by Optimal Payments.

The average enterprise value of a technology company on AIM has decreased in the six month period – but, given the macroeconomic conditions at the turn of the year, it is surprising that values have only decreased by 0.1% compared with 30 June 2015. This resilience has been largely supported by the software sector, with enterprise values increasing by 2% compared with decreases in hardware (12%) and telecoms (9%).

Dougie Hunter, Associate Director at Moore Stephens, comments “the gap in valuation multiples of software companies compared to hardware companies on AIM has widened again in the second half of 2015. It closed to within 5% at 30 June 2015, but the difference now stands at closer to 40%, although given the small population of hardware companies on AIM, compared to software companies, it can easily be skewed by the performance of one or two companies such as Telit Communications and Vislink which have both seen large falls in market value in the period.”

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Dougie Hunter

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