At the height of the debt crisis which peaked in 2009, the North East of England saw a record number of insolvent businesses being taken over by investors. Recently R3 commissioned Experian Corpfin to research insolvent company takeovers and those still distressed. Findings show that far fewer insolvent businesses are being taken over in the North East.
As per statistics, in 2009 there were 21 companies taken over during administrative insolvency proceedings which were at the height of the debt crisis. The following year, 2010, saw 15 companies of 131 acquisitions that were the result of insolvency and this year the numbers are greatly improved. According to Experian’s report, only one of the 22 acquisitions was the result of insolvency proceedings.
According to the North East regional chair, Linda Farish, distressed acquisitions have been a great part of the business deals conducted over the past few years. To date, investors have been given the opportunity to acquire distressed businesses along with their assets for extremely low amounts of money as values have remained low.
These bargains have opened up a whole new investment strategy in the North East as specialists are cropping up, a virtual explosion in turnaround investors. At the moment, however, these deals are becoming much more difficult to find whilst some investors are finding it extremely hard to obtain the financing they need to make the deals.
Ms. Farish states that investors who are able to finance their own acquisitions should simply remain on the ready as there is quite likely to be lucrative investment opportunities with the continued supply, albeit a slowing supply, of distressed businesses as the UK attempts economic recovery. As the supply of distressed businesses wane, demand will increased which is why she advises to stay on the alert ready to bid and buy.
