Whilst most building products companies batten down the hatches to ride out the current property downturn, smart businesses will be assessing the opportunities for mergers and acquisitions, says Clearwater Corporate Finance.
The firm says the slump in property will have had a knock-on effect in the construction sector, filtering down to businesses such as builders’ merchants, construction products manufacturers and tool hire and equipment suppliers. However it offers companies the chance to acquire other businesses at realistic values or to consolidate and strengthen their position.
Jon Hustler, a partner with Clearwater, says: “No-one knows precisely when the market will turn but when it does, those firms that have consolidated their positions through creative dealmaking rather than hiding their heads in the sand will be the ones who make the most from the upturn.”
Hustler points to a number of recent deals which highlight the opportunities for consolidation. In May the French construction materials group Compagnie de Saint-Gobain acquired builders merchants Gibbs & Dandy plc for £43 milion and a second UK company, bathroom products distributor In-Line Sales and Distribution Ltd, for an undisclosed sum.
In April, Travis Perkins plc acquired Tile It All (UK) Ltd following on from its acquisition in November 2007 of Tile Giant (Holdings) Ltd.
Hustler adds: “The downturn offers companies the chance to pursue a growth strategy at more realistic prices than when values were at their peak. Now is also a good time to consolidate so that when things do improve, you can emerge stronger and better placed to take advantage.
“Appointing a corporate finance adviser who knows the market will allow you to assess the options and ensure that you are aware of opportunities as and when they arise.”