Frankfurt stock exchange more attractive to SMEs than London

Going public in Frankfurt is much more attractive than in London in particular for small and medium-sized entities. This is the finding of a joint study by the Center for Entrepreneurial and Financial Studies (CEFS) at the Technical University in Munich (TUM) and the European Business School (ebs) which was presented on the occasion of the equity capital conference 2006. The central question to be answered by the study was the influence of a going public on the costs of capital of a company.

The entry costs to the Frankfurt stock exchange amount to 8.7 percent of the issuing volume and to 11.7 percent in London. Allowing for the transaction costs entailed by the stock exchange quotation in Frankfurt cost of capital rise by another 2 to 6 percent, whereas in London this surcharge amounts to between 3 and 8 percent. Thus, there is a fair market value advantage for companies listed in Frankfurt which ranges between 0.8 and 2.4 percent. These advantages are particularly marked in the Entry Standard which is the relevant market segment for small and medium-sized entities. GERMAN