Consolidation in the Industry

[Richard Bunting]

PRG's has yet again increased its market share of the lighting hire industry with today's announcement of the acquisition of Essential Lighting for £6m. Essential, you may recall, were bought out by the Australian conglomerate, Staging Connections, exactly a year ago, and managed to attract two ex-PRG staffers, Loz Wilcox, and John McEvoy, shortly after (Frying Pan and Fire now springs to mind). Staging Connections cited the recent economic downturn as its reason to sell, and not pursue its UK business plan. With PRG's Greenford base due to finish its lease in the near future, they have now another London base to move to, so they don't have to service their West End clients from two hours away in Birmingham. Time will tell as to who and what stays where?

 

Today's news comes after the relevation this week that both PSL and SPS have gone into administration. Is this just the beginning of consolidation with the Industry, or just a coincidence of timing?

 

Interesting Times Gentlemen, Interesting Times.

 

 

RB

[tokm]

I got a press release email this morning about all this, wondered how long it'd take for the news to break on here.

 

IMO, with mergers in general, even these days, its a even (ish) mix of consolidation to allow companies to survive and companies (specially the very large ones with no real risk of going under) just taking advantage of a good business opportunities that come from due to the demise of others.. which just happen to be more common these days!. Companies are looking to perhaps get a good deal on something that'll help them expand which in turn also may help them survive.

 

In the case of PRG, I think there's a bias towards it being the latter of the two sides. They've likely seen the acquisition of Essential as a good investment as it'll open up a new source of revenue by (hopefully) having most of Essentials current clients And as Richard said, should they end up having to move in 2 years time.. Having Essentials current premises owned by them, means they're in a great position of having a ready setup and working facility to run operations from.

 

Just my view's & thoughts.

 

T

[Pete McCrea]

However when I was at their unit back last summer it seemed pretty rammed.... But they may well be able to buy more in the area, or sell what they've got to help fund somewhere bigger.

 

As for the mergers and acquisitions... Well hopefully it will do some good. If there's fewer companies servicing simillar or lower amounts of work, then hopefully there won't be the attacks on pricing that are some times seen. It may also have the benefit of weeding out the people who are in it to make a quick buck, as it's going to be the companies that do a good job, with decent kit at the right price that are going to survive. As well as those who can make the cash flow work....

[indyld]

.. its a even (ish) mix of consolidation to allow companies to survive and companies (specially the very large ones with no real risk of going under) just taking advantage of a good business opportunities that come from due to the demise of others..

 

Don't think for a moment that just because a company is large (has a big client book, lots of premises and a large staff) there is no real risk of it going under. Those businesses also deal with a lot of business risk, debts to manage and sizeable overheads. I'm not just making snide remarks - the "size" of a business is just not directly related to it's position.

 

On the consolidation point, I think that the industry is generally poorer for this kind of thing in terms of value and diversity not to mention pay and conditions. But I might just be a bit biased because, as a freelancer, I have moved away from working for "large scale" lighting companies for a number of reasons ( some of which have been recently discussed in other parts of this forum).

 

In the past, I also have a natural negative reaction to larger businesses (not in this case) who move into an area with smaller outfits with some pretty heavy handed tactics to bolster their own position. This has not been unknown in our "cosy" little industry and is pretty unpleasant. I'm not anti big business but we all end up working around 2 or 3 groups of companies, that can't be good thing.

[RobOwen]

The biggest expense bar none is staff, and the more you got the worse you get hit when times get tough. If you employ 500 people and work falls off you get very skint very quick.

[Pattern123]

We can add Stagecraft to this list now, gone bust as of last week. The biggest problem Companies large or small are having right now is finance, in other words renegotiating loans or having loans & kit financing withdrawn or turned down by nervous Banks. This is always worse in industries like ours where the Bankers don't understand what we do so get more nervous about risk. Many companies may have survived the past few years with poor books and dubious balance sheets by borrowing & refinancing - that option is no longer open to them.