Has the tide turned toward private alternatives?

15 years after an initial MBO and a decade after Mercia Asset Management’s IPO on AIM, CEO and co-founder Dr Mark Payton reflects on the realities of AIM and asks whether public markets remain a meaningful path for ambitious founders.

Mercia was established in 2010 through the MBO of WM Enterprise before listing on AIM in 2014. We did so with the conviction that AIM could play a distinctive role in scaling innovative businesses with strong growth prospects.

A decade on, we have grown from a breakeven business turning over less than £1 million with c.£23 million in third-party funds under management into a dividend-paying business generating c.£35 million in revenue, £8 million EBITDA and managing c.£2.0 billion of assets. It is worth asking: was it the right path for us, and is it still the right path for ambitious founders today?

The question is unsettled. IPO volumes in the UK have slowed and AIM has seen a marked decline in new listings. As a market, it has underperformed the FTSE 100, 250 and 500. Against that backdrop, founders and investors are rightly considering whether public markets such as AIM remain a viable route to scale, liquidity and long-term capital.

Having led Mercia through 10 years as a listed business, I see the answer as nuanced. Public and private markets are not opposing forces but two ends of the same growth continuum. Both provide capital, but the trade-offs are stark and the choice depends as much on leadership and governance as valuation and liquidity.

Why we listed

For Mercia, the decision to list was strategic. We began as a private fund manager focused on the Midlands, with a passion for backing regional founders often overlooked by London-centric capital. Going public gave us the balance sheet firepower to invest alongside our funds, enabling us to support companies more deeply and at later stages, and critically to accelerate our own regional growth through selective acquisitions.

In short, AIM gave us financing flexibility and acquisition currency we could not have achieved as a purely private manager.

The pressures of public life

Listing also brings demands that private companies rarely face. Public markets impose continuous disclosure, a short-term agenda, close shareholder scrutiny and a rhythm to reporting. For leadership teams that cadence requires time and focus, which sometimes competes with the immediate pressures of scaling.

Liquidity on AIM is real but limited. Unlike the main market, or US exchanges, daily trading can be patchy and valuations are exposed to sentiment swings that are often exaggerated by thin liquidity. Founders can feel whiplash between their own view of their company’s long-term potential and how the market prices it on any given day.

Yet discipline is not always a bad thing. For Mercia, public life sharpened our governance and strengthened our leadership. It forced us to be clearer in communication, more transparent in operations and more balanced between growth and sustainable performance.

Crucially, it deepened our engagement with shareholders, especially the retail investors who are the lifeblood of AIM. Their support has been instrumental to our journey, and their perspective often grounds us in how we are perceived. For any company contemplating a listing, recognising both AIM’s liquidity limitations and the value of building strong relationships with institutional and retail investors is essential.

Despite the challenges, AIM provides benefits that private capital cannot always match. Liquidity, even if imperfect, allows investors to realise value without waiting years for a trade sale or secondary deal. Publicly traded shares also give companies a currency for acquisitions, enabling faster scale-up. For founders, listing can still be a moment of validation, attracting talent, partners and customers who value the credibility of a public company.

These benefits, however, only materialise with the right foundations: resilient leadership, professionalised governance and investor relations viewed not as a burden but as a chance to build a long-term community.

The shifting landscape

The harder question is whether AIM remains as relevant as it was a decade ago. Alternatives have gained ground: growth equity, trade sales and secondary funds all offer capital and liquidity without the same public glare. The scarcity of IPOs in recent years reflects that shift.

Still, I would resist writing AIM’s obituary. Its role is to provide risk capital to growth businesses that may graduate to the main market.

Yet it faces challenges: improving listing conditions on the main market, dwindling liquidity on AIM and, most damaging, the 50% reduction in IHT benefits on AIM shares. Without support, AIM risks losing its appeal.

Discussions are under way for measures that could resuscitate it, whether through institutional capital redirected via the Mansion House Accord or modest changes to VCT rules that would permit more investment through AIM and enhance secondary liquidity. With sensible reforms, AIM could regain its footing and remain a vital part of the UK’s growth ecosystem.

Looking ahead

As we mark 10 years since Mercia’s IPO, I see public and private markets not as rivals but as complementary parts of the capital continuum. Each has its risks and rewards, each suits different stages and strategies. For us, a public listing enabled a decade of growth and regional impact. For others, private routes may prove more appropriate.

The lesson I would share with founders is simple: an IPO is not an end in itself, but a beginning. Listing is not the destination; it is a step on the journey. What matters most is clarity of purpose, strength of governance and the ability to bring both retail and institutional investors along. If the UK genuinely wants to retain talent and scale sustainable businesses, the government must view AIM as a stepping stone for the next generation of FTSE 100 companies and improve its financial and regulatory environment to make that possible.