Approved – 9 October 2009

Six Month Window Left To Get Acquisition Value, Advises NE Expert

A north east insolvency expert is advising regional companies on the acquisition trail that the next six months is likely to be the window during which they will get best value for their investment.

Jim James, north east regional chair of R3 and head of the Insolvency and Corporate Recovery Unit at Ward Hadaway law firm, made the observation as the first signs of economic recovery are beginning to show within corporate markets.

r3 logoEarlier this year, R3 predicted that the autumn would see an increase in the usual levels of deal activity, due to a continuing fall in company values and increased clarity over the general direction of the economy.

Now, as these factors take effect and the market slowly begins to show signs of picking up, Jim James is advising companies that have access to acquisition finance to reach agreements before spring 2010, by which time he expects economic conditions to have returned to something approaching normality.

And he is also highlighting the important role these acquisitions will play in maintaining and creating employment in the region.

He says: “Through the recession, there have still been some company acquisitions going on in the region, which has been good news in terms of safeguarding jobs and economic output.

“Whilst we can’t yet say for sure that the recession is nearing the end, and whilst we know that its effects will last long after it is technically over, there is no doubt that conditions are improving, and an increasing number of companies are exploring their acquisition options.

“Difficult economic conditions always bring opportunities for some business, and there are now plenty of commercial opportunities available for those with the capacity to move quickly.

“There are plenty of ‘zombie’ companies out there that are just ticking over at the moment, but with the right financial investment and management input, they could make far better progress and reap far greater rewards.

“Such improvement in business performance would go a long way towards both maintaining existing employment opportunities and creating new ones in the future.”

Jim James is cautioning firms to ensure they are fully aware of the potential risks involved in any deals, and of the right way in which to approach them.

He continues: “The issue for purchasers, as always, remains choosing the right target, with an added factor that buying companies in financial difficulty or insolvency is different to buying other businesses - things move faster by necessity, there is less due diligence and, with insolvent firms, there are no warranties.

“Potential purchasers need to be aware of the risks and be prepared to move quickly when opportunities arise, and there are a number of important areas in which businesses can be starting to plan now for future acquisitions.

“Getting the right advisers on board is crucial to a deal’s chances of success, especially in situations when buying an insolvent operation is concerned, but the skill of the management team in both making the deal happen and then integrating the new business into existing operations is perhaps even more important.”

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Notes to editors:

  • R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners from all over the UK.
  • R3 comments on a wide variety of personal and corporate insolvency issues. Please contact the press office, or see for further information.
  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
  • R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals.