In the last 5 years, there have been over 50 acquisitions in the UK Records Management market. However, with the digital first agenda, what does this mean for an industry that has typically delivered sustainable high margins.
Will only the fittest survive?
It has been noticeable how those smaller companies that have maintained their independence have diversified into revenue streams that naturally affiliate themselves with data storage - Confidential destruction, scanning, document hosting and non-document storage, have plugged some of the gaps that have been left as we move towards a paper-lite environment.
The traditional organic growth of records management has slowed over the past 5 years, and even with the post-GDPR bounce, the future of hard copy document storage is by no means certain.
Current profits remain high
Currently, underlying profit at records management Companies remains high, with movement from supplier to supplier continuing to be minimal - This, despite some contracts which handcuff clients to services by way of excessive permanent withdrawal fees, recently being questioned in the courts. As long as the service remains good, clients are loath to uproot and move. Absorption of costs to transfer and a more proactive approach are required for clients to make the leap.
But where will future growth come from..?
Against this backdrop, the question remains as to where future growth in the market will come from?
The 3 key UK players continue to grow via acquisition. And, although it is noticeable that the largest player has not made a single UK acquisition in this space since 2016, one Company has made over 40 acquisitions in the last 10 years and there continues to be demand for quality run businesses with solid client bases that offer the opportunity to cross-sell.
Guy Spragg has over 25 years’ experience within the Document Management sector. Having successfully sold his business in 2012, he now advises data-centric businesses on exit strategies through Boss Equity.