Acquisition attractiveness more than skin-deep

Keywords Plimsoll, Metal treatments, Publication

Acquisition attractiveness more than skin-deep

A total of 70 companies in the metal treatments industry are reported to have emerged as the most attractive companies to buy. This is according to Plimsoll's new Buying or Selling Acquisition Guide.

For the first time ever, Plimsoll has put a current and future "price tag"on every company in the industry. Companies most attractive showed the greatest gap between current and future value.

"Valuing a company is complex. Ultimately there is no final answer; it's a function of agreement. A balance must be met between current worth and what it might be worth in the future", says David Pattison, general manager of Plimsoll.

Plimsoll has demonstrated in their analysis of the industry that the 70 most attractive companies could increase in future value by at least 50 per cent within one year. Currently, 64 of these companies are loss making and all of them carry pre-tax profits far below average. Obviously the onus falls on a potential buyer to get a better return than the present owners.

Not all companies are potentially as good an investment as the 70 "cherry-picked". Although currently achieving healthy sales and profits, 67 companies showed that their current value was unlikely to be increased by more than 5 per cent.

Pattison goes on to say, "Buying a strong, highly profitable company is risky because the company will command a price premium. It could prove difficult to improve current profitability over and above its present level. Even by increasing sales beyond what is realistically predictable, these companies currently look over priced".

Plimsoll created the Buying or Selling Acquisition Guide not only with the acquirer in mind but also the seller. The goal when selling your company is to make it as attractive as possible in order to obtain the highest value. Not only does it value every company in the industry it also looks at ways you could make your company more valuable within 12 months.

The Guide contains 1,000 companies in total with 396 companies specially analysed to show current and future values. Every company contains the latest four years of accounts from Companies House. Each of the entries also contain a 12-month plan proving how a company can be improved thus enhancing its attractiveness to a buyer. Companies presented may not be currently for sale.

To obtain more information on the Plimsoll Buying or Selling Acquisition Guide: Metal Treatments, telephone Plimsoll on +44 (0)1642 257800.

Details available from: Plimsoll Publishing Company Ltd. Tel: + 44 (0) 1642 257806; Fax: +44 (0) 1642 257806; E-mail: plimsoll@dial.pipex.com