Opinion

Now could be the time to marry a competitor

people

Last updated: 13th Sep 2010

Most markets are pretty incestuous, and none more so than the building products market. On the whole though this leads to a healthy environment where, although opportunities are hard fought, there is grudging respect between certain competitors.

With economic forecasts more challenging by the day, now may be the time to reflect whether these relationships provide a basis to explore if 2+2 can equal 5!

For example, there will be a number of business owners keen to reduce their involvement in their business who recognise a sale today may not achieve value objectives. They also recognise there is risk in simply handing over to the second tier or recruiting an external CEO candidate, whilst knowing organic growth will take years to get the value back to the levels required to make a sale worthwhile. If, alongside this, there is a competing and complimentary business at a different stage in its lifecycle, but with shareholders focused too on long term capital value, then starting a courtship maybe a very sensible strategy. It could well develop into a marriage where synergies and costs can be shared or saved and the best parts of both businesses can be developed.

All of this seemed inconceivable in the good times. Now though the world is different and different skills and strategies are required. Market share only moves truly in a recession, so why can't it be you that benefits from being brave?

Keith Pickering
Partner
Catalyst Corporate Finance

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