In its annual Acquisitions Study of 1500 installation companies, Plimsoll Publishing says strong companies should use this time to go on the offensive and buy up the competition.
The report says the driving force in the market is a group of 739 companies who, over the last few years, have built up a stock resource of cash, putting them in a strong position.
It says its findings “come at a time when it’s impossible to pick up a paper or see the news without seeing a story about how the credit market is affecting the performance of UK companies and slowing acquisition”.
It has identified 402 profitable companies in “growth areas” of the market that would make good strategic acquisitions.
In its valuation and assessment of future prospects, it also identifies 257 companies that are failing and least likely to survive.
Says David Pattison, senior acquisition analyst: “For years, acquisition activity in the security industry has been driven by distressed fire sales. Acquirers have been reluctant to invest heavily, instead they have been content to snap up bargain basement companies often getting bad deals, paying peanuts and getting monkeys. This attitude needs to change.
“Having the resources to buy one of these 402 powerful players is the perfect situation. In doing so, you take a strong adversary to your own company out of the market immediately, and it will instantly be generating profitability.
“The next step is then to focus your attention on the 257 companies we have identified who are failing anyway, pushing them out of the market.
“This may sound harsh, but if the industry is to develop and evolve then there will need to be casualties. Our latest study shows the candidates least likely to survive 2008 are pretty obvious.”
Copies of the report cost GB pound 350. Visit www.plimsoll.co.uk
