One in 10 companies in the UK civil engineering contracting industry could change ownership as a result of the current economic climate, claims a new study by leading financial analysts Plimsoll.
With a surprising number of “cash rich” competitors waiting in the wings, the market could be set for a prolonged period of consolidation.
“I am sure any director worth his salt would agree that, in the current climate, there are simply too many companies chasing too little market. With many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyers market out there for cash rich companies,” said David Pattison, author of the new Plimsoll Industry Analysis – Civil Engineering Contractors.
“In the Plimsoll Industry Analysis we have identified 195 companies that have a sizeable cash reserve sat on their balance sheets that, due to record low interest rates, is generating nothing. One company has a £47M cash pot; a whopping 80% of turnover. These companies are now in the position to buy up large chunks of market share at rock bottom prices and make that money work for them. They must be like kids in a sweet shop at the moment – all those distressed competitors available at a fraction of their true value”.
“The UK civil engineering contractors market is still widely regarded as one of the UK’s most fragmented sectors. In our report we analysed 910 companies with a turnover of over £1M per annum and have picked out 99 that are primed to be taken over. Buying one of these businesses represents a massive opportunity for someone to enhance their share of the market. Either way, the market is set for a wave of takeovers in the next months.”
Readers of New Civil Engineer are entitled to a £50 discount of this new special edition of the Plimsoll Industry Analysis – Civil Engineering Contractors. Call 01642 626400 for further details and quote reference PR/CS25