Mergers and acquisitions are set to rise as over 450 UK gaming companies are finishing the year in financial difficulty, new research has revealed.
A new study of the top 988 companies in the UK gaming industry by Plimsoll notes that 456 companies find themselves in challenging financial circumstances.
“Having clung on through the bad times, many of these struggling companies are running out of time and will fail unless a sustained recovery takes hold,” said David Pattison, author of the study. “Sadly, some of them are just too weak to carry on and there will be a spike of failures in the new year.
“On the flipside, their demise will bring a welcome reduction in competitive pressure for those left.”
It isn’t all bad news, however, with over 350 companies considered to be in a strong position.
“We have picked 344 strong companies that prove success can still be achieved in the gaming industry despite difficult trading conditions,” Pattison said. “They also prove that bad companies fail in a recession; good companies simply do not. These companies will lead the industry out of recession with some smart acquisitions to help maintain their recent success.”
This situation will result in an increase in merger and acquisition activity, he asserted, noting that companies will look to consolidate with timely takeovers.
“With too many companies chasing weakened demand it is inevitable that there are likely to be a number of high-profile mergers and takeovers.Further consolidation is needed to sort out the remaining dead wood.
“There are going to be big changes in the UK gaming industry with lots of takeovers, a number of high-profile failures and even the odd surprise or two along the way.”
