Trends & Features

Market set for wave of takeovers

One in five companies in the UK sports and leisurewear industry could change ownership as a result of the current economic climate, claims a new study by financial analyst Plimsoll.

And with a surprising number of cash rich competitors waiting in the wings, the market could be set for a prolonged period of consolidation.

“I am sure any director worth his salt would agree that, in the current climate, there are simply too many companies chasing too little market,” says David Pattison, author of the new plimsoll industry analysis.

“With many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyer’s market out there for cash rich companies.”

Pattison adds: “We have identified 78 companies that have a sizeable cash reserve sat on their balance sheets that, due to record low interest rates, is generating nothing.

“One company has a £39 million cash pot.

“These companies are now in the position to buy up large chunks of market share at rock bottom prices and make that money work for them. They must be like kids in a sweet shop at the moment – all those distressed competitors available at a fraction of their true value.”

The UK sports and leisurewear market is still widely regarded as one of the UK’s most fragmented sectors, says Pattison, who adds: “In our report we analysed 300 companies with a turnover of over £1 million per annum and have picked out 129 that are prime to be taken over.

“Buying one of these businesses represents a massive opportunity for someone to enhance their share of the market. Either way, the market is set for a wave of takeovers in the next months.”

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