Returning a distressed business to profit

Recently we met with entrepreneur Mark Levey to talk through his fascinating experience of turning a troubled businesses around. He also shared with us how he uses the Business Sale Report to spot new opportunities for himself and others.

After spending was contained, including making a number of redundancies, Levey got to work in altering the business model. The firm used to design, manufacture and store products to sell to retailers. Levey saw the opportunity to add new markets and reduce overheads by specialising in selling brand licenses to distributors.

Cash flow was guaranteed thanks to the addition of a clause in the licensing agreement that prevented factories releasing products to distributors unless they had paid up. Meanwhile, a five-year deal with a major online retailer guaranteed income for this period, allowing the business to reschedule debts with banks and HMRC.

Levey is now a minority shareholder in the successful business and has taken a step back from its day-to-day running. He is on the look-out for new opportunities to buy a distressed business and sees the Business Sale Report as a reliable source of information.

His advice to those considering buying a troubled business? Keep a close eye out for businesses experiencing financial difficulties, such as those that have had winding-up petitions issued against them, as early monetary pressure is very often a precursor to a firm entering administration, and getting in early will provide some of the best opportunities for buyers.