Waste management industry ripe for takeovers

A combination of stockpiling cash, difficult growth, low interest rates and ageing directors has left 164 companies open for acquisition from other firms, the company warns.

The Plimsoll analysis provides an individual profile of each of the UKs top 1,000 waste management companies. It offers an overall financial rating, a valuation, as well as an acquisition attractiveness assessment on each company and helps understand up and coming competitors in the market.

According to the report, 290 (29%) of the 1,000 businesses analysed have seen their debts increase and a quarter of companies are running at a loss. Furthermore, 45% of organisations did not see an increase in sales.

The report also found that 198 companies have over 5 million of cash on their balance sheet, while 469 firms are still operating as independents.

Finally, the analysis shows that nearly 25% of waste management directors will be 60 or older by the end of 2013.

David Pattison, senior analyst at Plimsoll, said: On one hand, 198 cash-rich companies have been stockpiling cash and their problem is that the built up cash could give them a real headache. Low interest rates mean this cash will be sitting idle on the balance sheet and not generating a return. It really needs to be put to good use and an acquisition seems an obvious option.

Pattison continued: Then on the other hand, 164 businesses in the waste management market are showing classic acquisition criteria. They are all declining in financial strength, many have an aging board and are still privately owned. These companies will need the support of their current owners or investment to ensure they have a future and many have acquisition potential. Given the circumstances, its quite possible that perhaps some of the directors will be looking to retire or even consider a sale.

The full report is available for purchase on the Plimsoll Publishing website.