Distressed Business Sales Up in North East

The number of firms being bought out of insolvency proceedings rose in the North East last year.  New figures from Experian Corpfin have shown that 1 in 6 takeover deals completed in the North East in 2009 involved a business that had been in financial difficulty.

The figures show that out of 116 deals done, 20 of them involved a distressed company compared with only 16 out of 200 similar deals in 2008.

Over the final quarter of the year, the rate rose to 1 in 5.  A trend that has been shown to be quite a way in front of the rest of the country with the UK as a whole seeing a rate of around 1 in 9.

The research was conducted on behalf of R3, who have said that the level of distressed companies being bought has remained high.

R3 North East chairman Linda Farish, a director of recovery and insolvency at Newcastle-based accountants RMT, said, “The increase in the North East percentage of insolvency sales may be accounted for by the way deals are reported to Experian Corpfin.

“While pre-pack administrations may account for some of these deals, others will be acquisitions by astute buyers taking the opportunity to pick up bargains while values are low. These statistics represent businesses being given a second chance of survival, and help to sustain employment opportunities which would simply disappear.”

R3 said there were 345 acquisitions of distressed business in the UK during the year, which made up an eighth of all mergers and acquisitions.

Back in 2008, the number of distressed acquisitions made up one in 27 of all mergers and acquisitions, with a total of 159 for the year.

Posted at 09:00AM May 15, 2010 by Marc Stenton in Insolvency  |  Comments[0]