Archive for the ‘On the Market’ Category

Tata Steel puts UK business up for sale

Wednesday, March 30th, 2016

Tata Steel has put the UK’s largest steelmaking business up for sale. The operation in Port Talbot, one of the few steelmakers left in the country, has been making heavy losses for some time.

A spokesman for the Mumbai-based company said that it was looking at “strategic alternatives” and wants to "explore all options for portfolio restructuring, including the potential divestment of Tata Steel UK, in whole or in parts".

Aberavon MP Stephen Kinnock, who has been in Mumbai with Community union officials to try and persuade Tata Steel to keep its UK operation, told the South Wales Evening Post: “We will not allow the closure of Port Talbot steelworks. One way or another, we will continue to make steel in Port Talbot, but it looks like Tata do not back the plan. We will work with Tata and the UK government to help find a buyer for the plant." The delegation was disappointed that it failed in its attempt to convince Tata Steel of the viability of keeping the business operating and turning around its fortunes by working with the unions and cutting costs.

However, trading conditions had deteriorated to the point where the Port Talbot operation had been losing a reported £1 million a day. The current worldwide oversupply, combined with slack global and domestic demand, as well as higher manufacturing costs, do not look like changing in the short to medium term.

So, what now for the remnants of British Steel? Certainly, it is hard to imagine a trade buyer ready to take over with these ongoing concerns, even if steel prices have shown some signs of recovery, moving up £30 per tonne to £285 per tonne since the end of 2015. The only real hope is that the issue is picked up as a political pawn (over which 3,000 direct jobs are at stake), with the Welsh and UK governments working closely to support a plan to make the steelworks look like a viable business opportunity.

For more information, see A guide to buying assets from insolvent companies.

What you need to know about winding-up petitions

Friday, February 20th, 2015

For business buyers, the land of distressed opportunities can be a happy hunting ground, filled with great-value deals and easy-to-acquire assets. But distressed businesses can also attract rival bidders, which is why keeping a close eye on companies served with winding-up petitions can be such a worthwhile exercise.

So what exactly is a winding-up petition?

In short, a winding-up petition, or WUP, is a serious course of action taken against a business that fails to make financial payments to creditors. This can mean that the company has broken any trust the creditor had; its cheques have bounced; or the directors have not kept their word to make payments.

A powerful weapon in a creditor's armoury, a winding-up petition is served when a business, for whatever reason, simply cannot make the payments it needs to. The fact that it can cost anything up to £2,000 just to file a WUP is an indication of the severity of the action – it is usually a last resort when an individual or business needs to get the money they are owed.

Essentially, a WUP is an early indication – before a liquidation or administration take place – that a business has fallen into financial disrepute. Moreover, a winding-up petition is the start of a process which, if ignored, leads to the Compulsory Liquidation of a limited company.

So what is their relevance to business buyers?

As stated at the top, business buyers will often look to distressed businesses as ideal acquisition opportunities because companies that have fallen on hard times usually represent better value to the buyer. But this improved value can often bring with it greater competition. Getting a head start on rival buyers, therefore, is vital if one is to secure an acquisition before others beat them to the punch or enter the fray and drive prices up in a bidding war.

Importantly, once a winding-up petition has been served, the recipient business cannot sell the company or the assets, as this could be reversed by the court. So an immediate acquisition will likely not be possible. However, if one was to use the rather unflattering metaphor of a shark hunting injured prey to describe business buyers seeking out distressed opportunities, then a WUP is the first drop of blood in the water.

Winding-up petitions are not as well reported as administrations, nor are they a guaranteed sign that a business is about to go under, but they are a clear indication that there is trouble brewing. Thus, by monitoring WUPs a buyer can put a target company on their radar long before they will come to the attention of other buyers.

This head start can be crucial – it will give the buyer valuable time to conduct due diligence into the acquisition target, weigh up any assets that would be beneficial to their existing business(es) or establish if they could viably attempt a turnaround of the entire company. Importantly, they can do this before the target enters liquidation or administration, at which point many other buyers will be alerted to the opportunities.

The window of time in question, between a winding-up petition being served and the fate of the company being decided, often in the form of a liquidation or administration, is between six and eight weeks. This gives the buyer time to not only conduct the aforementioned due diligence, but also to speak directly to the sometimes desperate owner of the troubled company and lodge their interest, therefore improving their chances of cementing a deal when the appropriate time arrives.

So, in the competitive merger and acquisition market, where any slight advantage can yield huge benefits, understanding and closely monitoring winding-up petitions can provide the all-important edge a business buyer needs to achieve the sale they're after.

The Business Sale Report tracks all the latest businesses to have winding up petitions lodged against them. Click here to view the latest winding up petitions lodged in the UK.

Getting a head start on competitors when buying a business in administration

Tuesday, January 6th, 2015

It didn’t take long for the wheels to kick into motion following City Link’s slide into administration two weeks ago as today (6 January) the news broke that a buyer has been found for the company.

The parcel delivery business finally ran out of road on Christmas Eve, with union bosses condemning the failure and subsequent 2,000-plus redundancies as an “absolute disgrace”. But no sooner had the dust cleared from its unceremonious collapse than a buyer stepped forward in the form of rival logistics firm DX Group.

DX announced on Tuesday morning that it had bought more than £1 million worth of City Link’s assets including parcel-scanning equipment, cages used to transport parcels within warehouses and “certain intellectual property”.

The value of the assets is well known to the head of DX, Petar Cvetkovic, as he was once City Link’s managing director before leaving to set up the rival business several years ago.

It had been five years since City Link had posted a profit so, while the timing of its demise was unfortunate, leaving many without presents under the Christmas tree, it was not altogether surprising.

Nevertheless, the nature of this deal and the assets that were bought demonstrates that, even when a business has failed, it will still possess things that are of clear value to rival companies. Moreover, these assets are often available at a knockdown price.

That is why businesses in administration are in such demand among business buyers – because they can be dissected; the prime cuts can be taken away from the deteriorating carcass. In this case the factory equipment can have a clear and immediate benefit for DX, enabling the company to expand its operations or save money on machinery it would have had to buy later on.

The undisclosed intellectual property also points to another attractive selling point of distressed businesses. Whether it is bespoke software for a specific sector or a patent on a particular product, IP can add value to a business looking to grow or become more efficient.

Although City Link’s closure was one of the more widely reported administrations of the past 12 months – again because of its ill timing and painful consequences on people’s festive celebrations – the story illustrates the value of monitoring businesses in distress. Many similar collapses will not receive so many column inches, meaning business buyers must look a little harder to remain abreast of such developments.

Waiting for stories to report on the fate of companies often leaves it too late – a better, more proactive approach is to seek out listings of businesses that have failed or are failing. This will not only give potential business buyers a head start over many competitors, ensuring they spot businesses that have fallen into administration first, but it will also allow them to monitor signs of distress, including things like winding-up petitions, which act as the proverbial drops of blood for the sharks in the M&A pool.

If you are interested in identifying potential turnaround opportunities before the competition, then take a look at our latest businesses in administration list which we update daily for our subscribers.
Related information:
More information on City Link in administration

Silverstone race track sold for a fraction of investment

Wednesday, November 20th, 2013

Silverstone, the historic race track, is to be sold for a little over £10 million after the British Racing Drivers Club (BRDC) announced its plans to distance itself from the track. The final sale price is significantly less than the investment put into the track over the years, suggesting that the buyer could have managed to get a bargain.

The BRDC is a group of around 800 senior motorsport figures and includes Formula One drivers Jenson Button and Lewis Hamilton. It took the lease on Silverstone in 1952 when it bought it from the Royal Automobile Club. In 1971 it went on to buy the freehold on the site from the Ministry of Defence.

However, the track recorded a net loss of £3.3 million in 2012, prompting the BRDC to take action to distance itself from the circuit. The terms of a deal were agreed in August when a conditional binding agreement to sell Silverstone Circuits Ltd was signed. The deal covers the sale of the track, along with a separate lease of 467 track-related land.

No information on who the buyer is or what the exact price of the sale will be, is available. But reports from The Independent made it clear that the final sale price will be significantly less than the investment spent by BRDC on building new pits and a paddock complex two years ago, as the latest accounts filed show that the track, plant and machinery have an assigned value of £10.8 million.

However, the investment proved necessary to land the British Grand Prix contract, as a letter from outgoing BRDC chairman, Stuart Rolt, to members explained: “In fact, had the money not been spent to build The Wing and improve the circuit, there would have been no 17-year F1 contract, the circuit would have had no value, and the BRDC would not have been able to secure such a successful deal with Mepc, who were attracted by the on-going value of the Silverstone brand.”

Nicole Farhi's new owner to be revealed

Thursday, July 11th, 2013

The new owner of Nicole Farhi should be revealed shortly given the high level of interest the business is receiving from companies and investors looking to buy a distressed business.

Reports suggest that the administrators from Zolfo Cooper – a team comprised of Peter Saville, Fraser Grey and Anne O'Keefe – will really have their work cut out narrowing down the dozens of expressions of interest Nicole Farhi has received.

The business entered administration last week due to increases in costs and the decline in spending that has hit many high street firms. While the business has clearly struggled in its current state, the name and brand remain strong and it looks like the administrators will be able to pick and choose who they believe is the best buyer to take the company forward.

Mr Saville said that there have been over 50 expressions of interest from investment and trade buyers from people based in the UK and overseas. He told Insolvency News that this is to be expected with such "an iconic and deeply ingrained fashion brand".

The administrator added: "We are evaluating the many and varied expressions of interest and look forward to being able to announce a successful conclusion to the process in the coming weeks.

"We would like to thank management and all employees for their professionalism and hard work during this process."

Nicole Farhi was sold by its previous owners, French Connection, back in 2010. Since then the firm has continued to operate five standalone stores and a number of concessions in departments stores including Selfridges and House of Fraser.

Public sector rejig to provide acquisition opportunities?

Wednesday, May 8th, 2013

Privatisation of public services will always be contentious; but while some will spend their time discussing politics, others are keeping a hawk-like eye on the Government's disposal strategy in order to spot any business opportunities that might crop up in the disposal process.

Over the past few months the Cabinet Office has been revealing plans to sell off a number of departments in an effort to cut costs and raise funds. The result will be a drastically slimmed-down Civil Service, with as many as 75,000 public sector employees transferred into the private sector.

Among the departments mooted for sale are the Government's Behavioural Insights Team – commonly dubbed the 'nudge unit' – and the Royal Mail postal service. The Government stake in uranium enrichment firm Urenco has also been put on the market, alongside millions of pounds worth of other state assets that are due to be sold as part of the Coalition's efforts to cut costs.

But the disposal plan isn't just going to open up direct opportunities to buy businesses and assets. It will should also stimulate a change in the country's business attitude, which in turn could well boost economic growth. Cabinet Office minister Francis Maude explained: “The state is an inherently monopolistic entity and a state monopoly can be the enemy of enterprise.

“Within the public sector there is a legion of entrepreneurs, fired with the public service ethos but deeply frustrated with the constraints imposed by the monolith within which they are imprisoned. Liberating them as leaders of a new cohort of public-service mutuals will create a whole new enterprise sector in our economy.”

Related articles:
Negotiating Techniques when Buying a Business
Acquisition Strategy

2012 could see more big name retailers fall

Tuesday, April 17th, 2012

Retail administration has been big news in the first few months of 2012, with Game and Blacks just two of the major firms we've seen fold.

La Senza, Blacks and Past Times also hit the headlines as the number of retailers falling into administration during the first quarter of the year increased by 64 per cent in comparison to the final three months of 2011.

Woolworths was one of the first major high street names to go into administration, back in 2008. Little did we know how long-lasting the effects of the recession would be. Fast forward to 2012 and it's clear that we're not out of the storm just yet.

Research from Deloitte suggests that some retailers may have to reduce their property portfolios by up to 40 per cent in the next five years in order to adapt to the changing demands of their consumers. This is likely to come with substantial job losses, delivering a blow to the economy during this fragile time of recovery.

Lee Manning, restructuring services partner at Deloitte, observed that one of the main triggers behind the administration of retailers is the fact that their resources have been over-stretched by having too many marginal stores. “As online retailing continues to grow whilst overall spending is weak, the fixed costs and poor performance of some stores drags on the overall business,” he added.

Here at the Business Sale Report we've also witnessed this trend as bigger and bigger names fail to keep up with the market. Of course, administrations aren't simple and the fall-out can be tough to deal with. But for those on the ball, they also offer a great deal of opportunity.

The retail sector in particular might be one to keep an eye on in light of these recent figures as the number of companies falling into administration excluding retailers declined between the first quarter of 2011 and the same period in 2012 by ten per cent.

Rising administrations see landlords scrabble for tenants

Wednesday, August 17th, 2011

The rising number of businesses facing distress and imminent administration may present opportunities for people looking to buy or rescue businesses, but for landlords they are proving to be a costly headache.

Closing retail stores and administrations of high street chains have left UK landlords facing some £393 million in lost rent and increasingly desperate to find new tenants to buy out the leases.

Research published by the Investment Property Databank (IPD) has shown that, out of a total annual income for commercial landlords across the UK of £7.2 billion, the annual loss amounts to some 0.5 per cent.

The landlords have been hardest hit by some of the highest profile administrations, which have left thousands of square feet of prime retail space standing empty across the UK. Some the big names include Oddbins, Focus DIY and Haldanes.

IPD's UK and Ireland client services director, Malcolm Hunt, said the affects of the closures would obviously hit some landlords harder that others, but those facing the worst of it will be scrabbling to fill their spaces.

"Only 16 percent of property funds could lose more than one percent of their income stream as a result of these corporate failures," he pointed out. "The two most important retailers affected are Focus DIY and TJ Hughes with potential total impacts over the lifetime of their leases of up to £231m and £94m respectively."

£10m sale of Ant and Dec production company under discussion

Wednesday, April 6th, 2011

The production company founded by television hosts, Ant and Dec, could net them as much as £10 million if newly revealed moves to sell it off are successful.

Information emerged today about secret talks to sell Gallowgate Productions – possibly to ITV – which have apparently been going on "for months". The company holds the rights to a number of successful entertainment and game show formats, including Saturday Night Takeaway and Push The Button.

The company also holds the rights to the popular children's TV drama, Byker Grove, on which Ant and Dec first rose to fame. Television industry insiders said that the company will gain the highest value if the popular pair remain involved in its operation.

"The rights to the shows alone are worth a decent whack," one industry member said. "But if you can tie Ant & Dec in, that raises the value and makes it a very tempting sale."

It is thought that ITV is keen to gain tighter control on the Gallowgate shows, which have long been integral to their entertainment programming, particularly in the popular Saturday night schedule.

No one from Gallowgate has yet commented on the news, but a spokesman from ITV said, "Our focus is on improving the creative output of ITV. We have also been clear that we want to develop our international footprint and we will look at opportunities to invest in that area."

Calling entrepreneur bookworms: Bournemouth Literary Festival is up for sale

Wednesday, January 26th, 2011

The Bournemouth Literary Festival, which has been held annually for the past five years, has been put on the market by its director, Lillian Avon.

The Festival celebrates a variety of creative writing from around the globe and has featured well-known writers including Man Booker prize-winner, Howard Jacobson. The Bournemouth Literary Festival was understood to be the inspiration behind last year’s launch of the UK Business Books Festival.

The sale also includes Debut Books, a small publisher of guides for novice writers, and an accompanying website.

In an enigmatic statement, Avon said: 'the sale might challenge common perceptions of cultural value'.

We suppose it could be an interesting proposition for someone wanting a low-cost entry into the clubby world of literary publishing.