Family-owned component suppliers are coming under pressure to float on the stock market to raise money for expansion, says a new report on the vehicle engineering industry.
‘European consolidation has been held back by the tight shareholding structures of family-owned operations which makes the raising of finance much more difficult,’ BT Alex Brown analyst Mark Little said.
Family-owned suppliers facing consolidation pressures were mostly in Italy and Germany, but also in the UK and the rest of Europe.
‘We believe many family-owned companies will unlock their tightly-held share registers in order to float on the stockmarket,’ Little said.
‘The money raised should help ensure they are not marginalised in an increasingly competitive market.’
UK component suppliers agreed that consolidation pressures were forcing small family-owned companies to reconsider their business structures.
Robert Taylor, senior partner with Howard Roberts Associates, a Nuneaton-based components exporter with £1.5m turnover, said small UK automotive suppliers were under pressure to consolidate.
Family-owned firms performing well, particularly with strong regional market share, could benefit from restructuring with a flotation. But it was too early to know how many would take the share-market route or accept mergers with larger companies.
The next round of consolidation is expected among suppliers of braking, axles, powder metals, wiring, air-conditioning, lighting, fuel injection, locks, seats, tyres, security and exhausts.