Tough economy means opportunity for security companies looking to acquire

Friday, June 26, 2009

TEESDALE, UK--The silver lining to the bad economy is that there are some real bargains out there to be had for security companies looking to expand through acquisition, according to a new study by the market research firm Plimsoll Publishing.

With a record number of security companies in the UK losing money, "the current economic downturn represents one of the biggest opportunities in a generation if you have the courage and the capital," said Plimsoll.

In reaching that conclusion, Plimsoll rated 908 of the UK's leading security companies on their acquisition attractiveness and found that 71 of those are "ripe for the picking" based on a combined scoring system incorporating overall financial strength, ownership, valuation and future potential. "The current market conditions have presented an unprecedented set of opportunities to buy into a business that even a year ago would have been unaffordable," Plimsoll analyst David Pattison said in a statement.

The Plimsoll study identified at least 467 companies in the UK security industry that have the cash to buy up the companies facing serious trouble. The 71 companies highlighted in the study are all privately owned, many with a long and distinguished history, but are showing "serious deterioration in financial performance," says Plimsoll, and given the reluctance of the banks to lend, their time, money and options are running out.

"By definition, these are classic acquisitions," said Pattison. "Anyone looking to grow their own company through acquisition should be looking for businesses that are currently undervalued yet, with help, can be turned around." Achieving turnaround, however, will not be easy. Many of the companies singled out will need quick, deep cost cutting to get them back on firm financial footing, according to Pattison.

"We could see as many as 2,750 jobs go over the next 12 to 24 months as these companies shrink to ensure their survival," he said.