A typical acquisition strategy revolves around acquirers looking for a cut-price deal by preying on struggling and vulnerable businesses. The UK manned security industry is no different, says a UK company that does business analysis. Plimsoll Publishing suggests this attitude needs to change over the next 18 months.
The firm’s latest report into the largest 584 security guarding companies operating in the UK has identified 80 “high-class” acquisition targets which would enable prospective new owners to move into growing and highly profitable areas of the market.
Despite the fact these categories of companies are likely to cost a premium, these “high-class” targets offer potential investors a real opportunity to strengthen their position in the market and allow the company to continue on an upward trajectory, according to Plimsoll. The company’s November 2017 Manned Security Report names some 80 “high-class” acquisition targets, and 14 of these companies are described as highly profitable – these businesses offer the chance to move into a profitable area of the market and by being privately owned could make negotiations less arduous, the researchers suggest. Six companies are growing at over 10pc – these companies are among some of the most successful in the market, says the firm.
Plimsoll’s senior analyst, David Pattison, added: “It is a long-standing debate, when considering an acquisition, do you buy cheap or high value? In reality, most people’s idea of an acquisition is to wait until the business has declined so far meaning the only option is for a new owner to come in and save the business – essentially spending peanuts. However, we feel this approach needs to change. The acquisition strategy should be based on the direction of the current market. By acquiring a successful business, it gives both the company and the new owners a chance to add new investment and further cement their position in the market, whilst the current owners may feel they have taken the business as far as they can.”
Also in the study into the 584 major players in the industry, 252 companies have been rated as strong; 77 businesses have lost a third of their value; and 161 firms are making a loss.
The Plimsoll Manned Security Analysis is available to buy by clicking here.
