The number of companies on AIM has collapsed to just 612, down from a peak of 1,694 in 2007, as foreign buyers pick off London's junior market for bargains faster than new arrivals can replace them.
The scale of the retreat was underlined last week when two more of AIM's strongest performers agreed to fall into American hands.
Ramsdens Holdings PLC (AIM:RFX), the Stockton-based pawnbroker and jewellery retailer, backed a sweetened £232 million offer from US rival FirstCash, while Gooch & Housego PLC (AIM:GHH), the Somerset photonics group that makes precision optics for aerospace and defence, agreed a £346 million takeover by US private equity firm Arlington Capital Partners.
Both deals feed a trend that new research confirms has become the defining feature of AIM's long decline.
Research by UHY Hacker Young, a national accountancy group, found that 767 junior companies have been acquired in the past 20 years.
Takeovers now account for 36% of the 2,129 delistings recorded over that period, outstripping every other reason for companies leaving the market.
The concern is that the pool of quality AIM companies is thinning fast, with too few flotations to make up the numbers.
Colin Wright, chairman of the UHY Hacker Young group, said private equity funds and corporate buyers increasingly view AIM companies as undervalued.
"There are now plenty of opportunistic funds out there that will take advantage of even a relatively temporary slump in an AIM company's market capitalisation," he said.
Wright argued that acquirers see strong prospects in AIM firms and have proved willing to pay more for them than institutional investors will.
While that flattered the companies involved, he said the steady erosion of the market was deterring new listings.
He questioned whether it had become too easy to take over a UK-listed company compared with rivals such as the New York Stock Exchange or Nasdaq.
Wright suggested boards might be given more encouragement to resist bids they believe undervalue their businesses, though he acknowledged the need to protect shareholder rights.
Recent reforms allowing dual class share structures could, in time, reduce the number of opportunistic deals, he added.
The second biggest cause of delistings was strategic failure, which accounted for 303 departures, or 14%.
Financial stress or insolvency was responsible for 434 delistings, or 20%, though its share has been falling as the quality of AIM companies improves.
