‘Distressed’ deals on the up
MORE than 20% of all mergers and acquisitions in the North West now involve businesses in distress, according to research by data provider Corpfin in conjunction with insolvency trade body R3.
The figures from Corpfin show that distressed deals are at their highest level in recent years. But they also indicate that businesses with access to acquisition finance are taking the opportunity to grow.
Of the 115 deals during the third quarter of 2009, 25 (almost 22%) involved companies acquired out of administration or other formal insolvency procedures.
The level was more than double that of the same period in 2008, when just 12 out of 130 deals (9%) involved distressed businesses.
Corpfin’s data shows the number of distressed deals has been gradually rising over the past three years as the credit crunch and the recession took hold.
During the whole of 2008 there were just 24 insolvency deals out of a total of 646 (4%) while in the first three quarters of this year there have been 58 insolvency deals out of a total of 347 (16%).
Matt Dunham, North West regional chair of R3, said: “We predicted earlier this year that autumn would be an ideal time to start to acquire businesses in distress and these figures seem to bear that out.
“The continuing fall in company values, together with low interest rates, are combining to create the optimum conditions for distressed deals.
“There are now plenty of commercial opportunities available for companies which are on the acquisition trail and have the capacity to move quickly.”
