Acquisitions set to increase in 2005

UK - Business analyst Plimsoll Publishing has claimed that acquisition activity is likely to increase in the UK's sound equipment industry in 2005. A new study highlights 54 cash rich companies that are ideally placed to enhance their earnings by acquiring a competitor: 51 companies have been identified as their acquisition prospects. Ranging from some of the smallest to some of the largest in the industry, each is displaying symptoms of financial stress, with low pre-tax margins and high levels of debt. The average level of debt for these companies is 11% of turnover. However, the analysis also demonstrates that each of these businesses could be turned around in a short period of time.

David Pattison, Senior Analyst at Plimsoll, says: "These under pressure companies are running out of options. As the average industry profit margin is only 1.4%, and over half of companies are failing to increase sales, trading their way out of their current position will be almost impossible. With so many cash rich companies operating in the market, selling up might be the only sensible option left. By acquiring and clearing the debts of any one of these struggling companies, a cash rich company could become the proud owner of a profitable business."

The Plimsoll Portfolio Analysis - Sound Equipment is a comprehensive financial analysis of the top 238 companies in the industry. The current edition includes a free Acquisition Pack highlighting the 'under pressure' companies that each display the characteristics of an acquisition prospect. The 366-paged analysis and Acqusition Pack is available in paper format (£305) or electronic format (£499 plus VAT). Order by calling 01642 626400 or at the website below. Readers of LSI Online will receive a 5% discount.

(Lee Baldock)

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