Nominated Adviser

A Nominated Adviser (also known as a ‘Nomad’) is a specialized advisory firm approved by the London Stock Exchange (LSE) to act as a guide and regulator for companies listed on its junior market, the Alternative Investment Market (AIM). Think of a Nomad as a combination of a corporate mentor, a chaperone, and a watchdog, all rolled into one. Every single company on AIM is required to retain a Nomad at all times. Their unique and crucial role is to both advise the company on its responsibilities and, simultaneously, to ensure the LSE that the company is appropriate for the public markets and is following the rules. This creates a fascinating dual loyalty: the Nomad is paid by the company, but its primary duty is to the integrity of the market. This structure is unique to AIM and is fundamental to how this particular market operates, making the Nomad a key figure in the life of any AIM-listed business.

The Nomad's role is not just a formality; it's an active, ongoing responsibility that begins long before a company's shares start trading and continues throughout its life on the public market. Their job is to ensure that AIM remains a credible and well-regulated exchange for smaller, growing companies.

A Nomad's responsibilities can be broken down into two main phases: getting a company onto the market and keeping it there.

• Before the IPO: When a company wants to float on AIM, its first port of call is to appoint a Nomad. The Nomad then performs extensive due diligence, kicking the tires on every aspect of the business—from its financials and management team to its business model and growth prospects. It's the Nomad's job to judge whether the company is suitable for a public listing. If it gives the green light, it helps prepare the admission document (similar to a prospectus for a main market listing) and shepherds the company through the entire Initial Public Offering (IPO) process.
• After the IPO: The work doesn’t stop once the champagne corks have popped. The Nomad acts as the company’s continuous adviser and primary regulator. It advises the board on all its ongoing obligations under the AIM rules, such as when and how to announce price-sensitive news, how to handle director dealings, and the proper procedures for corporate transactions like acquisitions or raising further capital. The Nomad is the LSE's first point of contact, effectively vouching for the company's good conduct on an ongoing basis. If a company breaks the rules, its Nomad can be fined or even stripped of its license.

For an investor interested in the smaller-cap world of AIM, understanding the role of the Nomad isn't just academic—it's a vital part of the investment analysis. The choice and stability of a company's Nomad can be a powerful signal about its quality and governance.

The reputation of the Nomad a company chooses to work with speaks volumes.

• Reputation Matters: A top-tier, highly respected Nomad has a valuable reputation to protect. They are less likely to risk that reputation by bringing a low-quality or fraudulent company to the market. Seeing a reputable Nomad on the ticket can therefore be an initial, positive filter for investors.
• A Red Flag: Conversely, a sudden change in Nomad is a massive red flag. Companies are required to have a Nomad at all times. If one resigns or is fired, the company has a limited time to find a replacement. If it can't, its shares will be suspended from trading. This almost always signals a serious underlying problem—often a fundamental disagreement between the company's management and the Nomad over financial reporting, a proposed transaction, or the need to disclose bad news to the market. An unexpected “Nomad departure” announcement should have any investor on high alert.

In essence, the Nomad acts as a crucial layer of due diligence for the entire market. While a good Nomad doesn't guarantee a good investment, a bad or departing one is often a clear warning to stay away. For a value investor, scrutinizing the Nomad is as fundamental as scrutinizing the balance sheet.