The following article appeared in the Financial Times in early March 2009:
Turnaround experts are warning that there could be a wave of business failures later this year because they are unable to get to these companies quickly enough.
Companies that specialise in rehabilitating businesses believe that they are only seeing a fraction of the companies in trouble because the sharp down-turn has left banks-which would normally refer cases to them for business finance -feeling overwhelmed.
The main concern is with companies in the £10m to £100m bracket, which lack the funding to employ turnaround experts who can work alongside management to restructure the business.
Christine Elliot, chief executive of the Institute for Turnaround, predicted that the problems with these businesses could ‘come home to roost’ in the third quarter of this year and into 2010.
“Members who deal with the mid-market are not getting to tackle some of the problems they know are out there” she explained.
Steve Benger, turnaround director at RFP Management, an independent practitioner, said: “My colleagues and I have got quite frustrated”.
An increasing number of accountancy and law firms are employing people with experience of turnaround work to help struggling companies recover before being pushed into insolvency.
Two thirds of insolvency specialists are involved in the restructuring or turnaround of struggling companies, according to R3, the sectors trade body.
Private equity firms are also getting in on the act. Beer and Young, for instance, claims to have a network of 1,000 business angels who offer their experience and money to breathe new life into struggling businesses.
Declan Williams, director of business recovery at Beer and Young, said: “Investors have always liked turnaround because they are perceived as less risky than investing in early stage businesses”.
But turning to new investors is not always attractive to business owners, who have to dilute their share holdings as well as admitting to their mistakes. “Most entrepreneurs have 100 percent of a lot of problems when they come to us” Williams said. “Much better to have 30 percent of something of value in the future”.
Companies that specialise in rehabilitating businesses believe that they are only seeing a fraction of the companies in trouble because the sharp down-turn has left banks-which would normally refer cases to them for business finance -feeling overwhelmed.
The main concern is with companies in the £10m to £100m bracket, which lack the funding to employ turnaround experts who can work alongside management to restructure the business.
Christine Elliot, chief executive of the Institute for Turnaround, predicted that the problems with these businesses could ‘come home to roost’ in the third quarter of this year and into 2010.
“Members who deal with the mid-market are not getting to tackle some of the problems they know are out there” she explained.
Steve Benger, turnaround director at RFP Management, an independent practitioner, said: “My colleagues and I have got quite frustrated”.
An increasing number of accountancy and law firms are employing people with experience of turnaround work to help struggling companies recover before being pushed into insolvency.
Two thirds of insolvency specialists are involved in the restructuring or turnaround of struggling companies, according to R3, the sectors trade body.
Private equity firms are also getting in on the act. Beer and Young, for instance, claims to have a network of 1,000 business angels who offer their experience and money to breathe new life into struggling businesses.
Declan Williams, director of business recovery at Beer and Young, said: “Investors have always liked turnaround because they are perceived as less risky than investing in early stage businesses”.
But turning to new investors is not always attractive to business owners, who have to dilute their share holdings as well as admitting to their mistakes. “Most entrepreneurs have 100 percent of a lot of problems when they come to us” Williams said. “Much better to have 30 percent of something of value in the future”.
No comments:
Post a Comment