Buying a business out of an insolvency process can present a valuable opportunity, whether you are looking to acquire a competitor, expand into a new market or preserve an established business. However, buying from an insolvency practitioner is very different from a standard business acquisition, and it is important to understand the risks before making an offer.
If you are considering buying part or the whole of a business of a company in administration or in another insolvency process, our restructuring and insolvency specialists can help you assess the opportunity, identify key risks and move quickly with the right support around you. We work alongside your legal advisers to help you make informed decisions and complete the transaction on a commercially sound basis.
Why buying a business from insolvency needs careful planning
A distressed business sale usually moves very quickly. In many cases, there is a limited timeframe to review financial information, understand operational issues and complete due diligence before an offer is submitted. At the same time, the protections you might expect in a conventional sale are unlikely to be available.
When buying a business administration or insolvency, common issues can include:
- limited time for due diligence and decision-making
- incomplete financial and operational information
- little or no warranty or indemnity protection
- uncertainty around ownership of stock, equipment or intellectual property
- customer and supplier contracts that may not transfer automatically
- likely TUPE obligations if employees transfer with the business
- licensing, regulatory or premises issues that need resolving quickly
- the need for immediate working capital from day one
Contact us
Get in touch with our team.
Contact the teamHow we help
Our team can support you throughout the process, helping you move quickly while keeping sight of the key risks and commercial realities. We provide practical advice before, during and after the transaction.
We can help you to:
- assess the commercial and financial viability of the opportunity
- identify the most important due diligence issues and risk areas
- prepare forecasts and scenario plans for the new business
- understand the working capital required from completion
- liaise with administrators and other parties involved in the process
- work alongside your legal advisers when formulating an offer
- identify funding options for the acquisition and future trading needs
- provide ongoing accountancy, business advisory and restructuring support after the purchase
Who this support is for
This support is suitable for business owners, management teams and investors who are looking at buying a distressed business, selected assets or the business of a company in administration. It is particularly relevant where speed is critical and decisions need to be made on limited information.
Considering buying a business out of administration or other insolvency process?
Our experienced team can help you assess the risks, understand the opportunity and structure the transaction on a more informed basis. Get in touch for confidential, practical advice.
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Frequently asked questions
Find answers to some of the most common questions about buying a business or assets from an administration or insolvency process.
Yes. In many cases, administrators will seek to sell the business and assets of an insolvent company, often on a very short timetable. Buyers should take advice early so they can assess risk properly and move quickly if the opportunity is right.
Common risks include limited time for due diligence, incomplete information, no meaningful warranties, TUPE obligations, contract transfer issues, title and ownership concerns, regulatory requirements and the need for immediate working capital.
They may do. If the business is sold as a going concern, TUPE can apply, which means certain employee rights and obligations may transfer to the purchaser.
Not always. Some contracts contain insolvency termination clauses or require consent before they can continue or be transferred, so this should be assessed early.
You will usually need more than just the purchase price. Sometimes it will be possible to negotiate a deferred payment of the purchase price however buyers should also consider working capital, supplier payments, wages, deposits, stock requirements, bonds and any immediate trading costs from day one.
Get in touch
Get in touch to speak to one of our specialist advisers and explore how we can help you.
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