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.
Popular and well-regarded Sushi and Ramen restaurant and takeaway, which is situated in a prime city centre location in Norwich. The premises are set over three floors and are presented to an extremely high standard throughout and offers the opportun...
LEASEHOLD
Established respected business, holding valuable private and public sector client base, there being a number of key clients, some paying a retainer and from which regular repeat business is received ensuring a substantial pipeline figure.
A specialist manufacturing business of quartz and granite kitchen and bathroom worktops. It has been established in conjunction with retail premises (retail premises are also available if required). It offers a supply and fit service and is located i...
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.