Traditionally, a typical acquisition strategy revolves around acquirers looking for a cut-price deal by preying on struggling and vulnerable businesses. The UK’s security guarding sector is no different. However, new research into the financial health of the sector conducted by leading business analyst Plimsoll Publishing suggests this particular tactic needs to change over the next 18 months.
Plimsoll’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, the ‘high class’ targets offer potential investors a real opportunity to strengthen their position in the market and allow the company to continue on its upward trajectory.
14 of these companies are highly profitable (ie the businesses offer the chance to move into a profitable area of the market and, by dint of being privately owned, could make negotiations less arduous) while six companies are growing at a rate of over 10%. These companies are among some of the most successful in the market.
Plimsoll Publishing’s senior analyst, David Pattison, stated: “It’s a long-standing debate. When considering an acquisition, should a company determine to buy cheap or aim for 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 company – 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 concerned and its new owners a chance to add new investment and further cement their position in the market, while the current owners may feel they’ve taken the business as far as they can.”
Plimsoll Publishing’s latest study also reveals that 252 companies have been rated as ‘Strong’, 77 businesses have lost a third of their value and 161 firms are currently making a loss.
*The Plimsoll Publishing Security Security Sector Analysis is available to buy by clicking here