Three City firms achieved an unusual distinction in the latest quarter. For the first time since records began in 2013, three mid-market investment banks share first place in the rankings for clients in the FTSE AIM 100.

Berenberg, Panmure Liberum and Peel Hunt each advise 20 of the index's constituents. Panmure Liberum added two during the quarter, while Peel Hunt slipped from 22. Canaccord Genuity sits just behind with 18.

It is a statistical curiosity, but one that shines a light on the shifting tectonic plates beneath London's junior market.

AIM has become smaller, its advisory industry more consolidated and its best companies increasingly attractive to bidders or tempted by a move to London's Main Market.

The result is a junior market with fewer companies and a more concentrated group of advisers.

Three years ago, the three largest AIM brokers advised an average of 77 companies each. They now have an average of 91, according to Adviser Rankings.

That does not represent a sudden influx of flotations. It partly reflects mergers that have reshaped a broking industry forced to adapt to weaker trading volumes, scarce initial public offerings and the rising cost of research and regulation.

Panmure Gordon's combination with Liberum created Panmure Liberum. FinnCap and Cenkos Securities became Cavendish Capital Markets. Deutsche Bank acquired Numis. The names in the league tables have changed because the business beneath them has changed.

This would matter less if AIM itself were expanding. Instead, the number of companies on the market has fallen from 1,694 at the end of 2007 to 612, according to UHY Hacker Young.

Some of that contraction is an inevitable feature of a market designed for younger and riskier businesses. Strategies fail and financing runs out, as might be expected. In recent years, however, more companies have also concluded that the costs of a quotation outweigh its benefits.

While the usual travails of smaller companies have contributed to AIM's shrinkage, takeovers have become its largest single cause.

Of the 2,129 companies that left AIM over the 20 years to the end of 2025, 767 were acquired, representing 36 per cent of all delistings. A further 434, or 20 per cent, left because of financial stress or insolvency, while failed business strategies accounted for 303 departures.

The distinction matters. A market whose weakest members collapse might be accused of having a quality-control problem. But when its better companies are repeatedly acquired, the conclusion is different. Their appeal to bidders demonstrates that AIM continues to produce valuable businesses, while also exposing its problems with valuations and replenishment.

Colin Wright, chairman of UHY Hacker Young, said private equity funds and corporate buyers increasingly regarded AIM companies as undervalued.

'Those acquirers see the strong prospects of AIM companies and have been willing to pay more than institutional investors have been willing to pay for those growth companies,' he said.

There were 31 takeover-related departures in 2025, representing 37 per cent of the year's 85 delistings. Businesses leaving at a premium may reward shareholders, but they also remove companies with the growth, liquidity and track records needed to attract investors to the wider market.

'The takeover of many of AIM's best companies makes AIM seem far less dynamic than it is,' Wright said.

That raises the question of whether successful UK-listed companies are too easily acquired. Wright suggested boards might need greater autonomy to resist bids they believe undervalue a company's long-term prospects.

'Perhaps it is time to consider whether it is too easy to take over a UK listed company compared to other exchanges such as the NYSE or Nasdaq,' he said.

Any change would involve a trade-off. Giving boards or founders more power could deter opportunistic bids made during temporary share-price weakness. It could also restrict shareholders' ability to accept an immediate premium.

The introduction of dual-class share structures, which can give founders enhanced voting rights, represents one attempt to alter that balance.

The deeper difficulty is not simply that companies leave, but that too few arrive to replace them. A healthy growth market should operate as a conveyor belt, bringing private businesses into public ownership and eventually sending the strongest towards the Main Market. AIM has continued to deliver the second part more readily than the first.

Six companies graduated to the Main Market in 2025, the highest number in a decade and up from two in both 2023 and 2024. Another five announced or completed plans to move during 2026, including Brooks Macdonald, Young's Brewery and Amaroq Minerals.

Those moves show AIM can still nurture successful businesses. They are nevertheless another drain on its population when the pipeline of new flotations remains subdued.

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