THE roofing and cladding industry is preparing for takeovers as a series of “curious circumstances” begins to shape the industry, according to market analyst Plimsoll Publishing.
Its study warns that a combination of stockpiling cash, difficult growth, low interest rates and ageing directors has left 168 companies ripe for acquisition as the sector consolidates, evolves and starts to prosper again.
Senior analyst David Pattison explained: “On one hand, 30 cash-rich companies have been stockpiling cash and their problem is that the built-up cash could give them a real headache. Low interest rates mean this cash will be sitting idle on the balance sheet and not generating a return. It really needs to be put to good use and an acquisition seems an obvious option.
“Then on the other hand, 168 businesses in the roofing and cladding market are showing classic acquisition criteria,” he continued. “They are all declining in financial strength, many have an ageing board and are still privately owned. These companies will need the support of their current owners or investment to ensure they have a future and many have acquisition potential. Given the circumstances, it’s quite possible that perhaps some of the directors will be looking to retire or even consider a sale.”
The analysis provides an individual profile of each of the UK’s top 1000 roofing and cladding companies. It gives an over-all financial rating, a valuation as well as an acquisition attractiveness assessment on each company, and helps understand up-and coming competitors in the market.
The survey also found:
24% of directors will be over 60 by the end of the year
30 companies have over £5m of cash on their balance sheets
240 firms are still operating as independents
48% of organisations did not increase in sales
1 in 3 companies is running at a loss
147 of the 1,000 businesses analysed have seen their debts increase
