Nearly a quarter of the UK’s top 1,000 resellers are ‘clinging on for dear life’ in 2011, research has claimed.
Analyst firm Plimsoll has identified 1,000 top resellers in its latest research and rated them with the labels 'strong', 'good', 'mediocre', 'caution' or 'danger', according to their most recent financial performance.
A total of 243 companies are rated ‘danger’. David Pattison, senior analyst at Plimsoll, said: “Now that the storm is lifting we have been able to assess the damage left behind. A total of 243 companies are in parlous state and are starting the New Year clinging on for dear life. We have rated them as 'danger' accordingly.
“Falling demand was the final nail in the coffin for many. The mistake they made, though, was to not make those painful cuts early enough to protect their business.”
The analyst claims these firms will be increasingly squeezed out of the market due to not being competitive enough to survive. Their potential for acquisition is also in jeopardy as new growth areas appear more exciting. The analyst claimed there would be a "wave of corporate failures" among these companies in 2011.
Plimsoll also identified 100 companies out of the top 1,000 that could be bought for a discount and a further 88 fast growing companies that are "sure to attract the attention" of the larger players this year.
On a more positive note, the number of companies rated ‘strong’ by Plimsoll’s latest research rose to 451.
“We rated these companies as 'strong' in our latest report and I have to congratulate them. In fact, many of them retained a 'strong' rating throughout the recession,” Pattison said. “They have managed to be commercially successful without jeopardising their financial stability. While others fail around them, they are in pole position to capitalise in 2011.”
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