Study identifies bargain acquisitions in the UK
Created 02/12/2010, 04:56:17 pm - Updated on 02/17/2010, 08:29:29 am
About one-eighth of the UK’s top forklift businesses are vulnerable to being snapped up as a "bargain acquisition", according to a leading research company.
David Pattison, senior analyst of Plimsoll Analysis, says that the recession has caused a "sea change" in the UK forklift industry and that 67 of the top 462 UK forklift companies are targets for cheap acquisitions.
"For companies with cash to spend, there is a pool of targets to choose from. With the market starting to recover, it’s better to spend some of that cash on a discount acquisition than have it sit in the bank," Pattison explains.
His research found the recession has forced 165 companies into a loss-making position. As profitability has fallen, so have company valuations. One of the companies in the study has seen its value fall to 40% of its previous high.
"Despite the lock-down in the financial sector, corporate debts are still rising. Thirty-seven companies in the UK forklift industry now have debt levels which I would class as unmanageable," Pattison says.
He adds that in his study, 276 company owners were past the retirement age.
"How many of these older owners have the appetite to rebuild their businesses battered by the last two years?" Pattison asks.
The study identifies 121 companies that it classifies as "cash rich" and able to finance takeovers.
"I was shocked at the level of cash in the market currently ... Forany owner looking to sell their business these are the guys they should be courting," Pattison says.
