The Going Public Decision of Small- and Medium-Sized Firms

This chapter delves into the world of Growth Enterprise Markets (GEMs), focusing on their structure, strategic importance, and the role of Nominated Advisors. It begins by explaining the functioning of GEMs, with a particular emphasis on the UK AIM and the EuroNext Growth Milan. The text then reviews the most relevant literature on GEMs, highlighting five key research streams. These include the characteristics of firms that choose to list on GEMs, the role of Nominated Advisors, the underpricing of IPOs on GEMs, corporate governance and disclosure of information, and the cost of raising equity capital on GEMs compared to main markets. The chapter also presents an econometric analysis based on a sample of IPOs undertaken in the EuroNext Growth Milan, studying the factors that influence the amount of equity capital listed companies can raise and the value they realize one year after their IPOs. The findings of this analysis have key practical implications for candidate firms, investors, EuroNext Growth Advisors, and stock market authorities. The chapter concludes with a discussion of the benefits and challenges of listing on GEMs, providing a comprehensive overview of this important topic in corporate finance.