Easy prey for acquisition hunters

36 of the UKís Top 2000 Employment Agencies companies have been named and identified as classic acquisition targets. This finding has been extracted from a new survey by industry analysts Plimsoll Publishing Ltd. The survey has assessed each of the UKís leading Employment Agencies companies on their overall financial strength and 8 measures of acquisition attractiveness.

The 8 measures are all recognised criteria used to locate and assess a company from an acquisition point of view. David Pattison, senior analyst on the project, comments;

What we have done here is the donkey work. This analysis cuts out hours and hours of boring research. It just leaves you with the sexy bit of actually making the decision to buy one of these companies.

A company scored a point for each of the following 8 criteria it met:

* 432 companies have sales growth above the industry average
If the company is generating healthy sales, then a new owner may well be more interested in it as a basis of building a bigger future company.

* 232 companies have a low financial rating
If the company is showing signs of financial stress, a new owner may well be interested in buying it cheaply, cutting costs and returning stability.

* 286 companies generate high actual earnings, yet lose money These companies all have high earning potential, but also high overheads. New owners will look to reduce debts, salaries and other costs to improve profits.

* 146 companies have a big difference between their current and future values Using the current year and a projected future year, the difference in the companyís actual value was calculated. Isnít any company that can be bought cheaply and then increased in value a classic acquisition?

* 375 companies have directors fees taking a high proportion of profits High directorsí fees often indicate a lifestyle factor in the company. New owners should be able to reduce this figure and retain more profit for the company.

* 154 companies have a high average directors age
Probably the factor that most interests the classic acquirer. Spotting an aging board is often seen as a way to an amenable approach.

* 489 companies do not have a parent company
Having a holding company may make negotiations complex. Acquisition hunters need not worry as there are plenty of independents to review.

* 625 companies are controlled by a small board of directors With fewer directors, a unanimous decision to sell is more likely to be made. The more points a company scores, the more attractive it becomes to a potential acquirer.

Companies and how they scored:

Score No of Cos
0 1092
1 113
2 253
3 248
4 169
5 89
6 33
7 3
8 0
Total 2000

David Pattison continues,
The full analysis is ideal for curious acquirers. They almost certainly will have some targets in mind. This analysis will help them to consider these and other options objectively.

The full study contains an individual analysis of each of the 2000 companies based on their latest 4 years of financial performance. Also included is an analysis and scoring of companies based on their acquisition attractiveness, including a company valuation.

The research is available from Plimsoll Publishing priced at 450 vat. The price includes both paper and software versions. Call 01642 626400 or visit plimsoll.co.uk for more details. Readers of the publication can claim a 5% discount when ordering.