Opportunistic cash-rich companies and wealthy individuals are still lining up to make investments in struggling companies according to a Birmingham turnaround firm.
Birmingham-based LC Corporate Strategies, the turnaround arm of national corporate recovery outfit Leonard Curtis, has set up a substantial database of would-be acquirers with circa £10 million to invest in businesses facing difficulties as a result of the current downturn.
LC Corporate Strategies director Stephen Fern said: “Businesses with a healthy working capital are acquiring troubled competitors at lower market values.
“Similar to Lloyds TSB being in a position to soak up one of its largest competitors, in the small and mid-market we are seeing the same trend as some companies feel the pinch of the economy more than others.”
Mr Fern said LC Corporate Strategies was seeing more and more companies experiencing cashflow pressures due to soaring energy and raw material costs coupled with a reduction in available credit.
It is marketing its business match-making service to owner-managers and directors of struggling small and mid-sized enterprises across a range of sectors, including manufacturing, recruitment, haulage and retail.
Mr Fern said: “Given the economic implosion that we’re seeing, we are getting a lot of contact from directors who seem to have had enough - they are just fire-fighting. They don’t know which way to turn.“They don’t want to see their business die, it’s their pride and joy and they’ve built it up over the years.
“We can help them with an exit strategy.”
Mr Fern said there were still companies and individuals out there who had money to invest and who believe opportunities exist despite the increasingly gloomy outlook.“Unfortunately the current economic downturn has impacted companies across the board.
“But there are people out there with money in their pockets and they are looking for opportunities, whether they want to buy a whole company or just a stake in it.
“Buyers are looking to get businesses - not at a cut-price rate - but you’re not paying premium prices at the moment.
“We have access to companies as well as high-net-worth individuals who have money to spend.
“For example we worked with a company a few months ago where we implemented a turnaround plan. The company had a few hundred thousand pounds in arrears and lacked a financial director to maintain that side of things.
“We placed an interim into that role from our database and he knew a private individual with £10 million in his pocket.
“He spoke to the contact who said if the company met its sales targets, he would invest up to £500,000 in the business.”