The AIM market was once the place to be as the small caps enjoyed enviable adulation, investors were happy to splash out on buying the shares, and the stockbroking community felt that it had discovered a new and lucrative share market.
But the credit crunch has derailed the gravy train. Boom times are now a fond memory. Flotations have dried up, and for the first time in the junior market's 13-year history, the number of constituents has fallen, with nearly 100 dropping out this year.
The shares of AIM-listed companies have been savaged even more brutally than those on the main market. Stockbrokers, particularly those with a significant AIM presence, have also suffered as their cash rewards have been eroded and, in some cases, virtually disappeared.
But the current gloom could yield opportunities for the more adventurous. David Scott, chief executive of the newcomer stockbroker Alexander David, is one person who believes that expanding when times are hard could prepare the foundations for when the good times roll.
He is close to bringing his firm to AIM – not via a flotation, but through a reverse takeover. It is merging with AIM-traded Griffin, a small-cap investment and financial services group developed by Stephen Dean, the serial investor, who died shortly after agreeing the deal. Griffin suffered a £1.1m loss at its interim stage.
Michael Hicks, who is 73, will be chairman of the enlarged group. He has been in the City for more than 50 years, starting at a firm called HE Goodison, run by the father of Sir Nicholas Goodison, the former Stock Exchange chairman who masterminded the share-trading "big bang" that swept away centuries of City tradition. "I taught young Nicholas all he knew about broking," Hicks quips.
This week, Griffin shareholders approved the transaction, which also included the £1.2m sale of the group's small-cap (mainly Plus) shareholdings to a company where Dean, who died after a battle with cancer, was involved. The sale improves the merged group's cash position.
Alexander David is involved in private-client and institutional stock-broking. The company is very much a small-cap animal, and in spite of the current gloom continues to exude faith in the junior market's future.
It has a staff of 26, and is one of the few City firms still recruiting. Scott, whose 20 years in the City included spells at the stockbrokers L Messel and Lewis Charles and as director of corporate broking at ING Barings, before helping to launch Alexander David, is keen to develop the group as a rounded City player. Market-making, for example, is a possible extension.
Alexander David, which hopes to obtain FSA approval for the get-together around the middle of next month, has close links with Jarvis Securities, which has a share stake and provides back-office facilities. Andrew Grant, the chief executive of Jarvis, will be a director of the new group.
Scott is under no illusions about the difficult AIM environment his creation faces. He reckons that conditions will remain tough throughout next year. But, he says: "We have opportunities. We are a small, young company without the overheads of some of our much older competitors. We will be well positioned when the market upswing occurs."
In the meantime, he believes, his company will benefit because some AIM advisers are not, in his view, offering a satisfactory service to their client companies.
In addition to the decline in companies with an AIM presence and the fall in the number of recruits, the market has had to contend with some rather disturbing events. Two Chinese companies, for example, appear to have "lost" their top men and their shares have been suspended. And the ability of overseas-based AIM constituents to circumvent general stock-market obligations has surfaced yet again.
For much of its existence AIM could do no wrong, attracting constituents from around the world. Nowadays, almost every share market, wherever it is based, is experiencing difficulties. But lack of liquidity and the parlous state of some of its companies makes AIM particularly vulnerable. Still, if shares fall much further, takeover predators could start bargain-hunting.