Company For Sale!

In the current economic downturn, many companies are going into administration. While this is undoubtedly negative, for many businesses, the credit crunch has also resulted in lower costs, ailing rivals and an increased market share. Also, many business analysts claim that the market is becoming saturated with bargain basement assets waiting to be seized. Today, we will investigate buying a business in a downturn.

According to the media, now is not the time for aggressive expansion and many businesses are abandoning their growth strategies in favour of surviving the challenges the recession undoubtedly raises. In a struggling market economy, buying failing businesses provides an impetus for recovery and also a chance to maximise the profitability of existing business, however, it is not something that should be entered into without counsel and consideration.

Business is business

Historically, buying from an administrator has been perceived as an extremely high risk venture. However, in the current economic context, where there is a severe lack of credit available to finance the contingency plans of companies in distress, many people believe that companies which are failing now, would – in different market conditions – be successful.

If you are considering buying a company in distress, it is important you approach the situation -not with trepidation – but with caution. Understand the reasons behind the company’s failure and ensure your venture is informed by experienced advisors.

So, Should you take the Plunge?

Boom or bust, buying a company in distress is always a potentially dangerous venture. You must make sure you fully understand the true cost of the acquisition, from the price of the business to the cost of advisors. Also, you must make sure your own house is in order; consider if your current management and administrative structure can cope with additional demand and be sure where the acquisition fits into your current business proposition.