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Judges Scientific: when a buy and build strategy works

Judges scientific instrument
We commented previously on the questionable financial reporting of Restore PLC, a business adopting a so-called ‘Buy and Build’ strategy of debatable value. Judges Scientific, another business adopting a similar buy and build strategy, shows how it should be done.

Judges Scientific (LON: JDG) has acquired 16 scientific instrument businesses since 2005. The acquired companies are primarily UK-based with products sold worldwide to a diverse range of markets including: higher education institutions, the scientific communities, manufacturers and regulatory authorities.

Judges maintains a policy to selectively acquire businesses that generate sustainable profits and cash. Shareholder returns are created through the reduction of debt, payment of increasing dividends and through organic growth, which the Group encourages by creating an environment for businesses to thrive in, with support and advice for entity management teams. Judges companies predominantly operate in global niche markets, with long term growth fundamentals and resilient margins.

That last statement highlights a key differentiator to Restore PLC, which operates solely in the UK and appears to be acquiring businesses which are decidedly ex-growth with seemingly poor long term growth potential.

For the year ending 31 December 2018 Judges has reported revenue growth of 9% to £77.9m of which 5.5% was organic. While sales…

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