Support services group Mitie said it was prepared to spend between £55 million and £60 million on acquisitions in a bid to to play a part in the fast-consolidating support services and facilities management sector.
The group, which generates around £ 23 million to £25 million of annualised cash, recently acquired two small security businesses for £ 12.4 million, including Warwick-based family firm Watch Security.
However the company, which employs over 4,000 people in the Midlands, yesterday said it was still looking for a "more sizeable" deal.
Group chief executive Ian Stewart said: "The problem with acquisitions is that it is like buying someone else's second-hand motor - you also end up buying someone else's trouble and they can walk away.
"That is why we are looking for vendors that are willing to stay on in the business after acquisition - as was the case with Watch."
The support services sector has recently been galvanised by Carillion's bid approach for Mowlem and the decision by Amec to break itself up amid bid rumours for the company.
Mitie - which carries out engineering maintenance for Birmingham's Bullring -also revealed that it had bid for the privately- owned Planned Maintenance Group (PMG), which was eventually bought by Carillion for £50 million in March.
"We fell at the final hurdle for PMG, but we're still keen to do deals at the right price. We have a healthy balance sheet and see ourselves as an acquirer of assets, rather than being acquired," Mr Stewart added
He was speaking after the release of the group's interim results for the six months to September 2005.
These showed a 7.8 per cent rise in pretax profits from the group's continuing businesses to £23.4 million, on total sales 14.5 per cent ahead at £449.2 million. The interim dividend is raised from 1.6 to 1.9 pence a share.
The improvement in earnings was driven by the mainstream support services division which lifted profits from £ 13 . 5 million to £16 million as increased government spending on schools and new cleaning contracts for local authorities helped boost revenues by 15.5 per cent to £238.7 million.
Property services also did well, lifting profits from £3.9 million to £4.4 million in the period as the shift towards more social housing resulted in new maintenance contracts, while this division also won a major fit-out contract for the new BBC Media Centre in White City.
The only weak spot was in engineering services, where the closure of two units involved in 'cleanroom' services for the pharmaceuticals industry led to a 30 per cent fall in profits to £3 million.
"Clients no longer want the benefits of a 'one stop shop' contractor for cleanroom services. They prefer to shop around for their design, build and maintenance functions," said Mr Stewart. He also said the board had moved to restructure the engineering services division and that some redundancies among the 800-strong workforce had already been made.
"Markets still continue to be competitive across all our businesses, but we're delivering good top-line growth and I'm confident we'll meet our year-end targets," he added.