Buying liquidated assets an attractive option

Buying liquidated assets an attractive option

Buying the assets of a company in liquidation is potentially an attractive and low cost means of expansion for growing businesses.

 Only recently CPS Group, a lighting and audio-visual service provider, bought the brand and a large portion of assets of its local competitor Stagecraft Technical Services (STS) out of liquidation (both are located in South West England). The liquidators from Begbies Traynor had failed in their attempt to find a buyer for the whole business, before stepping in to liquidate it.

 In another example Aberdeen-based technology firm XL Group recently bought the assets of lift maker Ross and Bonnyman, after its Forfar-based factory was closed down and 30 staff made redundant on the appointment of liquidators from Begbies Traynor.

 The tight timeline around the sales of the assets of liquidated businesses is also indicative of the strong competition that often surrounds such deals. While they can be potentially risky prospects, the assets available can offer the expansion opportunities that firms would otherwise have to spend possibly years developing, so a good deal can create a clamour of keen potential buyers. Some of the first in line may well be existing management members, seeking to combine the assets with their expertise to build a new business, and who are prepared to move quickly.

 So the news that the number of company liquidations has risen and is expected to increase in 2012, whilst not savoury news on a macro scale, will be welcome to those on the lookout for opportunities.

 Recently published figures from the Insolvency Service for the fourth quarter of 2011 reveal a 14 per cent rise in compulsory company liquidations to 1,389, out of a total of 4,260 liquidations for the quarter, up by 7.2 per cent on the same period in 2011.

 It is expected that increasing numbers of businesses will fail as a lack of funding and low sales continue to bite.
 To conclude, taking on the assets of a liquidated business can be turned into a lucrative addition to a company but can also prove to be risky without the sufficient research and knowledge. Due diligence is paramount, as is assessing the true value of the stakes on offer, but with enough effort and some good choices, buyers can open up valuable routes of expansion.