More mergers on the cards

At least 63 UK recruitment agencies firms are prime targets for a takeover and another 126 could be sold off by their parent companies, according to a new report by independent business analysts Plimsoll Publishing.

At the other end of the scale are 80 major companies that are expanding rapidly, largely through acquisitions, and 252 ìpredatorsî who are using the misfortune of others to clean up in the market.

Plimsollís senior analyst, David Pattison, said: ìThe 63 takeover targets we have identified generally have a similar profile ñ they are privately owned, are in financial difficulty and have owners who are approaching retirement. Any firm in this position should be listening to the warning bells, because its potential selling price will be in the bargain basement. The other 126 distressed companies are operating as divisions of larger parents. Iím fairly certain that conversations are going on behind closed doors about their future.î

The big players in the market are focusing on companies with sales of around 5m. Interestingly, some are being bought not just because they offer good value for money and an extra foothold in the market, but in case they fall into the hands of competitors. The 366 companies that fall into this bracket are in the fortunate position of being in a sellersí market, so they are able to name increasingly higher prices as availability reduces.

Said David Pattison: ìThese are typically the two classic profiles of the takeover target ñ up-and-coming industry players and those who have fallen on hard times. Sadly, in the latter category we see some firms that were doing very well only a few years ago but allowed costs, debts and margins to get out of hand. Itís worth saying that our research has identified 361 companies whose current value is 50% lower than a credible future value. Potential new owners believe that they can run the company better than the current owners and turn this future value into hard cash. Against a background of over capacity, rising costs and falling margins, consolidation in the UK recruitment agencies market is inevitable in 2007.î

Plimsollís brand new VIBE analysis of the recruitment agencies industry paints a clear picture of each company in the market. It identifies those in financial distress, those with aging boards, those with hidden potential and a range of other factors that affect their likelihood of being taken over. VIBE is available to purchase today by calling 01642 626422 or e-mailing c.sherwood@plimsoll.co.uk. Readers can benefit from a 50 discount when quoting Ref PR04.

Plimsoll, based in Stockton-on-Tees, is one of the leading business analysts in the UK, France and Japan. It has 16,000 customers worldwide who rely on its reports to take crucial commercial decisions.

For further information, please email Clair Sherwood at c.sherwood@plimsoll.co.uk.