What does the sensible buyer need to know about purchasing companies in financial difficulty?
According to Keith Steven, of the business turnaround company KSA, the primary factor to bear in mind is that companies are in trouble for a reason, and a good plan is needed in order to turn the company around. "You need to consider whether the business separate from the company is viable."
Additionally, if the company has gone into administrative receivership or administration, you will need to consider your legal obligations to the employees of the company, as well as obtaining permission from the courts to use the company's trade name(s).
It is very important to carry out due diligence when considering a company in financial difficulty. Any creditors guarantees made by the previous owner are likely to be worthless. A house, for example, staked as collateral against the business, may have additional preferential claims against it. And of course, the goodwill element of a business in difficulty is likely to be negligible, which on the one hand places the buyer in a position to drive down the price of the business, but on the other hand, could make future trading difficult, when creditors have been left unpaid or part-paid by the receiver, or previous owner. As well as not being able to pay its creditors, a company in trouble will often find itself short-changed by its debtors. Companies who owe you money will assume you don't have the resources to chase them through the courts and may not pay what they owe.
For sale is a long-established tree surgery and arboricultural services business with an excellent reputation, serving both domestic and commercial sectors across Southern England, including the Home Counties and London.
An opportunity has arisen to acquire a mechanical engineering company specialising in the Water Industry. Benefitting from over 3 decades of trading, this business has built a solid and long standing client base comprised of prominent UK utility comp...
An opportunity has arisen to acquire a reputable IT support and development services provider with a UK-wide client base and a proven record for innovation and resilience in the constantly evolving IT sector. Throughout its 25+ year trading history,...
Join today to receive:
All this and much more, including the latest M&A news and exclusive resources
We can help you capitalise on insolvent businesses. We list UK businesses in administration, liquidation and with winding up petitions daily. Ensuring our members never miss out on an opportunity
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.