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Is it possible to sell my distressed business?

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Can I sell my financially distressed business?

If your business is nearing insolvency and is due to run out of cash, you may wish to dispose of your business through a cost-efficient exit route, such as selling your company on the open market. As an alternative to a company liquidation, you may wish to prepare your business for sale and attract prospective buyers to facilitate an exit. This route may prove challenging due to the failing health of your business, however, there is an entire marketplace dedicated to the sale of distressed businesses. If you are interested in selling your insolvent business, the first step is to determine a route through which to sell your business and if to enlist a highly experienced business transfer agent to direct the sale.

By using a business transfer agent with a proven track record of selling businesses, both healthy and ailing, you can gain access to a host of industry connections, entrepreneurs and business turnaround specialists searching for their next business acquisition opportunity. Buying a distressed or insolvent business is an inexpensive and cost-effective way to recycle businesses with the review to rejuvenate their health, stabilise the company structure and help navigate the business to a position of generating strong profits. Under suitable ownership and a buyer with enough financial backing, your struggling business can be transformed into a high climbing, commercial entity.

How can I sell my insolvent business?

If your business has operating liquidity, you may be better placed to sell your business and achieve a greater return in comparison to a pre-pack sale. This will likely depend on company cash flow as if your business has enough working capital, you may be able to drum up more competition and therefore agree on a modest offer.

You may find that if areas of your business are strong performing, however, a significant portion is operating at a loss, a prospective buyer may request to purchase part of your business as a workable alternative. If this is cost-effective and in the best interests of both parties, this route may represent the best chances of successfully achieving a business sale. A business transfer agent will be able to guide you throughout this process due to the nature of the sale.

What is a pre-pack sale?

A pre-pack administration is an insolvency procedure which sets out to market the sale of company assets to generate funds to repay creditors. A pre-pack sale consists of valuing company assets and directing the sale under the guidance of the company administrator which is a licensed insolvency practitioner. The administrator will help market your business for sale and sell the business to the highest bidder in the best interest of creditors. Due to the nature of a pre-pack sale, existing company directors may purchase company assets under a new company. This process can result in a speedy sale and ensure discretion.

What if my company isn’t insolvent?

If your business is insolvent, the value of your company will naturally drop and attract a different calibre of buyers, however, if your business is not insolvent, this instantly increases the likelihood of successfully selling your company. This encourages the attraction of your business and the number of prospective buyers which are likely to share expressions of interest.

A skilled business transfer agent can offer valuable insight into selling a distressed business and how to maximise sale value. The first step will be to conduct a business valuation to calculate how much your distressed is worth and how much you can realistically generate from the sale of your company. Taking into consideration the finances of your business, although selling a distressed business may be challenging, it may represent the best chances of achieving a return.

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