At least 45 UK CCTV firms are prime targets for a takeover and another 70 could be sold off by their parent companies, according to a new report by analyst Plimsoll Publishing.
At the other end of the scale are 24 major companies that are expanding rapidly, largely through acquisitions, and 56 ‘predators’ who are using the misfortune of others to clean up in the market, the report says.
Senior analyst David Pattison said: “The 45 takeover targets we have identified generally have a similar profile – they are privately owned, are in financial difficulty and have owners who are approaching retirement. Any firm in this position should be listening to the warning bells, because its potential selling price will be in the bargain basement.
“The other 70 distressed companies are operating as divisions of larger parents. I’m fairly certain that conversations are going on behind closed doors about their future.”
The report says the “big players” in the market are focusing on companies with sales of around GB pound 5m. It says some are being bought not just because they offer good value for money and an extra foothold on the market, but in case they fall into the hands of competitors.
The 15 companies that fall into this bracket are in the fortunate position of being in a sellers’ market, so they are able to name increasingly higher prices as availability reduces.
Pattison said: “These are typically the two classic profiles of the takeover target – up and coming industry players and those that have fallen on hard times. Sadly, in the latter category we see some firms that were doing very well only a few years ago but allowed costs, debts and margins to get out of hand.
“It’s worth saying that our research has identified 133 companies whose current value is 50 per cent lower than the current owners and turn this future value into hard cash. Against a background of over capacity, rising costs and falling margins, consolidation in the UK CCTV market is inevitable in 2007.”
The report is available from Plimsoll by calling 01642 626422
or emailing [email protected].
