Insolvent Company

[Batra Ventures UK Limited]

Any experienced people who have acquired an insolvent company?

Would love to hear from you.

[Williams lester]

Depends what you want to know...

[Batra Ventures UK Limited]

Acquiring an insolvent company and preparing an exit plan after recovery of the business.

[toddle2u]

Don't buy an insolvent Company buy the assets of the insolvent Company

[Williams lester]

Acquiring an insolvent company and preparing an exit plan after recovery of the business.

This is probably something you need to discuss with your accountant, as it depends what you are trying to achieve and why! There may be better options available.

[Dave Shaw]

Yes i've sold insolvent businesses as a practitioner and have been on the opposite buying side, restructuring and then sell on.

What do you actually want to know?

My general advice is make your bid as attractive as possible to a potential adminstrator - this is not just about price and keep on top of them to get things moving.

Make sure you can move quickly - simple things can hold things up; company bank accounts for example, VAT registration, etc.

Use an insolvency lawyer for the transaction not a 'normal' corporate lawyer.

Make sure the property aspects are dealt with and you understand what needs to happen - this is complex.

Consider having 2 entities - one for assets acquired and one for the trade; provides protection should the situation deteriorate.

Prior to the transaction check with any key suppliers (including lease companies) that they will support in the future - some finance companies are not willing to roll their agreements into a new company.

Make sure you have enough working capital - ensure you look at a worst case; sales are virtually always affected and key creditors charge more and want payment up front.

On day 1 make changes to the business, make them quickly and be ruthless - management are often at least partly to blame for the failure. Cut hard and deep - it is better to have to recruit people than make 2 waves of redundancy.

Keep control over the cash and spend time in the business. Make staff justify all expenditure.

Try and keep expenditure as 'variable' as possible - e..g reduce salaries and move to a performance basis.

Consider exit before the transaction - who will buy this business. This will determine strategy; e.g. if it is likely that a competitor will want to acquire the turnover and margin of the company don't build inflexible overheads as this will significantly devalue the business.

Continually examine the success of the businesss and potential exits - it may be better to take a quick profit with little risk than keep it for a long time.

If you are new to the market get a specialist in - don't rely on management.

That is my starter for 6.

Dave Shaw
totalitysolutions.com