Morrison Utility Services is targeting a significant acquisition after a year in which its turnover passed the £500 million mark.
Chief executive Charles Morrison said the company had formed a mergers and acquisitions team to identify possible targets.
Detailed analysis has been carried out on firms with turnovers of up to £50m and experience in the regulated sector.
Several targets have been identified, but bosses are delaying an acquisition until after watchdogs Ofwat and
Ofgem have announced their five-year funding plans from 2010 for the water and energy industries.
Both are expected to be announced in December and will go some way to determining how much money water and energy companies have for capital spending.
Mr Morrison said: “Funds are available for a bolt-on acquisition. We are looking for something that complements what we have already got.
“We are ready to press the button depending on what happens with Ofwat and Ofgem.”
Morrison’s turnover for the year to 31 March 2009 totalled £500m, the firm revealed this week. This represents a 1.5 per cent increase on the previous year’s £492.7m.
But the firm’s pre-tax profit dropped 55 per cent to £9.2m in that time.
Morrison’s order book currently stands at £1.35 billion, which would rise to £2.5bn if all possible contract extensions were achieved.
All Morrison’s work is in the regulated sector, with 37 per cent of its turnover coming from gas, 29 per cent from electricity, 26 per cent from water and 8 per cent telecoms.
Mr Morrison said the firm’s strength lay in its client relationships and long-term contracts – its turnover is garnered from just 14 clients.
He said: “It is tough at the moment, but to an extent we have had a softer landing than some.”
He added: “If you were a broadly based contractor with a £500m turnover you would probably have more like 40 or 50 clients.
“Our contracts allow us to know what resources we will need. We know our contracts will be over five years or so. If you can get a contract for five years it is a privileged position to be in.”
But having so few clients means retention is essential, he said. Morrison has its own training school to ensure its 3,200 staff meet qualifications required by its clients.
Following recent demands from clients, a customer service element is being built into training.
Ofgem has introduced quarterly league tables on customer service experiences related to workmen.
Mr Morrison said a customer focused culture for contractors was beginning to be perceived with the same level of importance as safety. As a result Morrison is now a member of the Institute for Customer Service.