For an insolvent company it is possible that the sale of a business unit or the closure of an underperforming business unit can make a significant difference to the financial position of the rest of the company. Usually, for an insolvent company, the sale of a business unit will be done as part of a Turnaround Management or Voluntary Administration.
Sale of business
If you are planning to undertake the controlled sale or closure of an under-performing business unit within your organisation, we recommend that you seek external professional advice, since this can be a very complex process, involving:
- negotiation with trade unions;
- dealing with property and chattel agents;
- handling redundancies;
- in-depth knowledge of insolvency and company legislation;
- business valuations;
- maximising business value prior to sale;
- tax implications;
- negotiation with creditors;
- preparation of information memoranda;
- control of the sale process;
- sale negotiation.
If you’re selling a business from within a distressed group structure, particular sensitivity is required during negotiations in order to avoid ‘value loss’. We are particularly experienced in these kinds of disposal and closure programmes, and we have access to an impressive portfolio of experienced professionals who can provide you with the best advice that will result in the most positive outcome.
It is often very difficult to accomplish a trade sale when a business is in financial distress or insolvent. The main reason is that trade buyers will be aware of the company’s problems and will usually conclude that by waiting they might be able to buy the business assets even cheaper.
There are ways to address the above problems and at Restructuring Works we have facilitated the sale of many insolvent or financially distressed businesses.
We regularly see companies that have directors who have excellent technical skills and have created excellent businesses but have lacked the financial knowledge to lead their company to the next level. Typically, these companies are under-capitalised. That is, they have never had the working capital available to fund growth.
Here is the thing not appreciated by many directors in that situation:
Undercapitalised companies with good management are highly sought after by investors.
We work very closely with several investors each with their own specific niche. The biggest problem they face is finding a viable business with good management in place. If you think your company may fit the description CONTACT US NOW for CONFIDENTIAL FREE ADVICE.