Debt Collection Agencies could change ownership
One in six companies in the UK debt collection agency industry could change ownership as a result of the current economic climate, claims a new study by financial analysts Plimsoll.
The analysts claim that while a “surprising” number of cash rich competitors wait in the wings, the market could be set for a prolonged period of consolidation. Plimsoll analysed 208 companies with a turnover of more than £1m per annum and the company picked out 64 that it claimed are primed to be taken over.
David Pattison, author of the new Plimsoll Industry Analysis – Debt Collection Agencies, said: “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. 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 added: “In the Plimsoll Industry Analysis we have identified 131 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 £41m cash pot; a whopping 80 per cent of turnover. 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.”
He claimed that buying one of the 64 collections businesses which are primed for takeover 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 few months,” he added.
Pattison said the UK DCA market is still widely regarded as one of the UK’s most fragmented sectors.
Credit Today
