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.
The wholesale business has an established trading history and has built up a strong reputation and a loyal customer base. Business is drawn from a wide demographic of clients with a good spread across different business sectors.
This is a unique opportunity to acquire a company specialising in luxury performance cycle clothing, utilising the finest specialist fabrics and cutting-edge construction techniques.
A leading internet-based provider of customisable and curated beauty box services. Over the last decade, the business has evolved from a premier subscription service to a leading internet-based provider of highly attractive and rapidly expanding beau...
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