Three entrepreneurs tell us about their experience of buying distressed businesses

harkness simon


Peter Harkness (above) and his business partner, Owen Davies, bought Highbury Communications, the North London-based publisher of many well-known newsstand magazines out of administration in 2006. The businesses downfall occurred after it had taken on too much debt - some £26m. This debt was mainly due to some disastrous acquisitions and the overly ambitious launch of new media products.

How Peter Harkness and his partner turned the company around so that it is now making a profit of £1m is an interesting story. The main focus was to get rid of the loss making magazines and concentrate on the "special interest" magazines that have a more loyal subscriber base. Due to the increased profitability of these new titles only 30% of the revenue now comes from advertisers. Profitability was further increased with the setting up of ecommerce websites closely linked to the actual titles.

Another successful entrepreneur, Simon Elliot (above right), saw an opportunity when the company he was interested in collapsed due to a £1m tax bill. Problems that were uncovered included a finance director who had been stealing from the company due to lack of oversight. One of the main attractions of the company were the long term contracts.

Both Elliot and Harkness found their target companies through careful research. Harkness says he 'used to spend hours and hours downloading files from Companies House', and Elliot's successful bid came after two previous potential mergers had fallen by the wayside. Of course another great source of information is the Business Sale Report, where companies that have gone into administration are listed on the site each day.

Stuart Wilde just just saw a business, liked it and just bought it. Stuart was in the middle of a home renovation project when he found out his favourite supplier had gone under. Stuart was relatively wealthy but at 52 he had 'itchy feet'. He jumped at the chance to buy the company, even though he had no experience in bathrooms or in retail.
'I did question my sanity for a couple of minutes,' he says, 'but I felt there was a good business there, and the main reason it had gone into administration was because the previous owners had spent £750,000 doing up the showroom without thinking about cashflow.'

So what have the entrepreneurs learnt from their experience. A number of key lessons seem to have been learnt.

  • You must move fast.
  • Have your funds ready to go.
  • Do your research even if you don't have time to do thorough due diligence.

  • Get outside advice, especially from people familiar with the administration process.



  • A more detailed version of this article where readers can gain more insight can be found by subscribing to the Business Sale Report


    Share this article



    Latest Businesses for Sale

    Bespoke Furniture Manufacturer (Fast Sale)
    Lancashire, North West, UK

    Indicative offers are required by 12:00 noon on Thursday 9 July 2020 with a view to completion shortly thereafter. The Joint Administrators are seeking parties interested in the business and assets of a Company that trades as a bespoke furniture manu...

    Asking Price: Offers Invited
    Turnover: £2,900,000

    LEASEHOLD


    Speciality Chemicals Manufacturer, Agent & Distributor
    UK Wide

    The business is a long established manufacturer, agent and distributor of speciality chemicals, largely plasticisers and dispersions (catalyst pastes) used mainly in the sealants, adhesives, plastics and coatings sectors for the UK and international...

    Asking Price: Offers Invited
    Turnover: £1,000,000

    LEASEHOLD


    Licensed Law Firm
    Surrey, South East, UK

    CLC licensed law firm based in Surrey looking for a sale due to retirement. Owner happy to stay on in short term for smooth handover. Work types are Residential Conveyancing, Wills & Probate and some Commercial Property matters. Offers invited.

    Asking Price: Offers Invited
    Turnover: £400,000


    View more businesses for sale

    Search Insights

    Free guide: 10 Biggest Buyer Mistakes

    Sign up to receive our acquisition alert emails to get your FREE guide

    Email


    Want access to the latest businesses for sale?

    Business Sale Report is your complete solution to finding great acquisition opportunities.

    Join today to receive:

    • Comprehensive range of businesses for sale
    • Make direct contact with business sellers or their intermediaries
    • Access to all UK administrations, liquidations and winding-up petitions
    • Daily email alerts for the latest businesses for sale & distressed notifications
    • Business Sale Report publication posted to you every month
    • Advertise your acquisition requirements on our "business wanted" section

    All this and much more, including the latest M&A news and exclusive resources