Insolvent Business Acquisitions
Administration can be a way to restructure and rescue an insolvent business and buying an insolvent business can be a bargain. However, itâ€™s a completely different experience to a solvent acquisition, with different valuations, sharply accelerated timescales, little opportunity for due diligence and only limited legal protection. Sterling has completed dozens of acquisitions from administration and can guide you through the process.
Pre-packaged administration has become a common process for selling the assets of insolvent companies. A deal is agreed pre-appointment with an insolvency practitioner, allowing contracts to be finalised immediately after appointment. The administrator has a duty to get the best recovery for creditors, so must be convinced that a â€˜pre-packâ€™ will give the best price for the business. However this will often be the case, as it minimises disruption, therefore preserving the value of the business.
Key issues where Sterling can assist include:
- Initial viability studies
- Valuation estimates
- Preparing a realistic business plan and financial forecasts
- Introductions to insolvency practitioners
- Identifying new funders
- Negotiating with the insolvency practitioner and key creditors