Distressed deals at lowest level in years

By January 17, 2012Finance, News

Acquisitions of insolvent businesses in the North West have continued to fall in 2011, according to research by Experian on behalf of the insolvency trade body R3.

The figures show that 48 companies were acquired out of administration or other formal insolvency procedures during the year, compared to 65 the previous year. Distressed deals accounted for one in 10 of all mergers and acquisitions in 2011, compared to one in seven during 2010, and one in five when activity peaked in late 2009.

 

Jeremy Oddie, North West chair of R3 and head of recoveries at Mitchell Charlesworth, said: “The continued fall in acquisitions of insolvent businesses has little relation to the number of insolvencies, but is likely to be due to a combination of factors.

 

“Not only has funding for acquisitions been hard to come by, but with the uncertainty in the Eurozone, many companies will have preferred to focus on their core business. The more recent insolvency cases may have also included a high number of zombie companies which are of little interest to investors.

 

“However buyers are still active in the market. These figures may well reflect the trend to structure deals as asset sales rather than company acquisitions because it makes for a more straightforward and less risky transaction.”

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