White Knights spark hopes of a recovery

David Smith (correct) (left) and Robert Edwards from Charterfields, pictured at the Harley Davidson auction the firm staged in Doncaster, following the closure of dealerships in Doncaster, Leeds and Stockport
David Smith (correct) (left) and Robert Edwards from Charterfields, pictured at the Harley Davidson auction the firm staged in Doncaster, following the closure of dealerships in Doncaster, Leeds and Stockport
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An upsurge in the number of companies seeking to buy businesses and bankrupt assets for cash could mean we are now at the bottom of the market, according to Sheffield-based surveyors and valuers Charterfields.

The company, which runs sales on behalf of insolvency practitioners, says it has seen a significant rise in interest from businesses that have cash to spend and want to use it to pursue growth strategies.

It believes there are opportunities for ‘white knights’ to pick up distressed assets and expand their businesses.

Charterfields director David Smith says enquiries are coming from both companies and corporate finance firms acting on their behalf.

“These are companies which are sitting on capital or backed by money from private investors,” said Mr Smith.

“They are strategic buyers who are targeting very specific opportunities and are prepared to wait for the right one to come along, one that fits with their agenda

“The fact that there is an increase in demand from private investors does indicate that they feel we have reached the bottom of the market. It suggests that the economy will start to rise and that now is the time to acquire.”

Mr Smith says enquirers include companies seeking to move into new regions.

Popular sectors include software, with successful companies taking the opportunity to build their product portfolio by acquiring intellectual property rights from insolvent businesses, and employment agencies, which supply temporary staff and have ongoing contracts.

Insolvent business can be a better option if the buyer can save elements that fit their investment strategy as they aren’t buying a company ‘warts and all,’ which requires costly due diligence procedures.

“There can also be a substantial goodwill benefit associated with acquiring a company in financial difficulties, as a ‘white knight’. There are companies out there that are thriving and the indications are that they are taking this opportunity to pursue growth,” says Mr Smith.