Some top manufacturers look easy prey for acquisition - Embedded.com

Some top manufacturers look easy prey for acquisition

LONDON &#151 Of the UK's top 1000 Electronics Manufacturers, 59 companies have been named and identified as classic acquisition targets in a survey by industry analysts Plimsoll Publishing. The companies have been assessed on their overall financial strength and 8 measures of acquisition attractiveness.

A company scored a point for each of eight criteria it met with 409 of the companies having sales growth above the industry average and 284 having a low financial rating.

New owners could look to reduce debts, salaries and other costs to improve profits at the 255 companies that generate high actual earnings, yet lose money so have high earning potential, but also high overheads.

Using the current year and a projected future year, the difference in the company's actual value was calculated to show that 174 companies have a big difference between their current and future values.

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

Spotting an aging board is often seen as a way to an amenable approach and 292 of the top 1000 companies have a high average directors age. Probably the factor that most interests the classic acquirer.

Having a holding company may make negotiations complex but acquisition hunters need not worry as there are plenty of independents to review as 358 of the top 1000 companies do not have a parent company and 494 companies are controlled by a small board of directors.

The full study contains an individual analysis of each of the 1000 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. Both paper and software versions and readers of EETimes UK can claim a 5% discount when ordering.

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