Shaping Up for the Future: the Rising Role of M&A in Plant, Equipment & Tool Hire

Shaping Up for the Future: the Rising Role of M&A in Plant, Equipment & Tool Hire

BDO’s recent UK Plant, Equipment & Tool Hire Review highlights there are over 100 UK hire businesses with EBITDA margins in excess of 25% and over 90 which have grown by at least 10% CAGR over the last 3 years. With the market driven by an increasing propensity to hire, a great deal of businesses are prospering.

However, challenges exist: low barriers to entry, high competition, intense price pressure, static hire rates and skills shortages are just some of the issues to be navigated. Add to that the challenges that Brexit may bring, including delayed projects and rising costs, hire businesses need to develop strategies to increase resilience and gain strategic advantage.

So what are the ingredients of success? BDO’s analysis revealed that the majority of fast-growing and resilient businesses have significant market share, are part of a larger group, or backed by private equity investors. Others provide adjacent complementary services such as contracting or operate in a specialist niche and many of these businesses have been building strategic advantage through Mergers & Acquisitions (“M&A”).

An example is Readypower Rail Services, one of the foremost accredited suppliers of professionally-operated plant hire services to the regulated rail sector, which was acquired by Primary Capital. BDO advised on this deal and its subsequent purchase of Terrawise Construction, which extended the business capabilities in contracting services, allowing deeper penetration of the high growth infrastructure market.

Other businesses have successfully launched new business models to align with the growing B2B on-demand culture. Nationwide Hire and Shareplant are examples of UK businesses that broker between suppliers and customers to offer same-day equipment hire across the UK. The development of telematics technology will further increase opportunities for businesses to gain agility, flexibility and operational improvements. These models challenge traditional hire, particularly those at the commodity end of the market.

Alan Chan, Assistant Director at BDO, commented: “We are seeing a huge amount of interest in acquisitions of hire businesses from UK corporates, international operators and private equity alike. The long-term fundamentals of the sector are strong, and valuations are attractive. As Brexit plays out, we believe there will be increasing opportunity to consolidate the fragmented supplier base as businesses use M&A to expand market share and product range, increase geographical coverage, align with high growth markets, and enter specialist and adjacent markets.”

By John Stephan, and Alan Chan at BDO LLP’s Mergers & Acquisitions team.

Visit BDO’s Building Products & Services webpage to download the full report:,-equipment-tool-hire-review

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