Benchmarking report compares business performance, debt capacity and M&A activity
Shaw & Co, the specialist corporate finance advisory firm, has launched the second of its annual in-depth reports into the Automotive, Transport & Logistics (ATL) industry; the latest in its regular series of reports that offer business leaders a powerful sector overview and benchmarking tool to aid their decision-making.
The report segments 2,033 ATL businesses with earnings of over £1m by size and sub-sector – Aerospace, Automotive, Marine, and Transportation and Logistics – to track their performance, profitability, debt levels, borrowing capacity and M&A activity.
The report’s key findings include:
- Scale: The industry is highly concentrated, with just 6% of the 2,033 companies analysed accounting for 66% of total turnover. Business owners should consider increasing their revenue generating capacity either organically or by acquisition. There continues to be a wealth of available funds in the debt market, although lenders are naturally more cautious given the current economic headwinds. Organic revenue growth through product innovation, better online presence, having stock on hand (considering the current supply chain interruptions), or by shoring up working capital, are all fundable options.
- Profitability: The data shows how effective smaller businesses have been at competing with the giants and preserving their own market share. Indeed, gross margin level and bottom-line profitability are largely comparable between firms with an Ebitda of between £3m and £30m. Most likely, this also implies that whatever scale advantages larger players generate, are passed on to consumers in more aggressive pricing from larger players.
- Borrowing: Over the last 12 months, with the exception of Transportation & Logistics, debt levels have marginally increased across most sub sectors. Nearly 50% of the total industry debt is carried by the Transportation & Logistics sub sector. Value of debt within a business, especially fixed rate debt, is a naturally positive feature in an inflationary environment. Business owners with growth aspirations should consider the alternative lending market to fund growth projects or scale driven acquisitions of competitors, key suppliers or distributors.
- Mergers & Acquisitions: 108 M&A deals were delivered during past 12 months, of which 72% were completed by UK buyers. This is particularly true for smaller deals. Outside the UK, US and Canadian buyers are the most prominent. In many cases businesses will already know the companies that are most likely to acquire them as they will already be key players in this market.
Colin Burns, Director – Business Funding, at Shaw & Co and editor of the report, said: “We are delighted to have launched our second annual, in-depth Automotive, Transport & Logistics sector report. We hope it will help SME business owners benchmark their own and their peers’ performance in the sector and aid their decision-making processes. Our aim is to provide small business leaders with free access to the same market intelligence as larger blue-chip corporates, who benefit from investment banking advisors. The report will also provide SMEs with valuable insight in terms of their relative creditworthiness and attractiveness from an M&A point of view.”
A full copy of the report is available here.
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About Shaw & Co
Shaw & Co is a leading corporate finance advisory firm that helps business leaders and SME owners across the UK to buy, sell, or fund the growth of a business. The Bristol-based firm, which was founded by Jim Shaw in 2011, has one of the largest advisory teams in the South West, specialising in a range of services from developing acquisition and exit strategies, business valuations and funding readiness advice, to trade sales, mergers, management buy-outs, and securing finance for growth projects, acquisitions and MBOs.
Shaw & Co has led a number of notable deals including the sale of Pukka Herbs to Unilever, the purchase of VoucherCloud from Vodafone and its subsequent sale to Groupon, and the sale of GoProposal to Sage.