Russell Bowyer – Buying a business in the recession

Posted by admin on 3 January, 2010 under Business advice, Business news, General business discussion, Looking to buy a business, Success Stories in business | 9 Comments to Read

ENTREPRENEURS looking for corporate ‘bargains’ over the festive season have been in luck as thousands of businesses are up for sale across the UK.

Those with ready money have been able to pick up businesses cheaply from specialist brokers and listing agents.

Business Sale Report, a leading listing service, has seen a 30 per cent rise in the number of owners advertising in December compared with November. Director Robert Moore says in addition to sales of distressed businesses, entrepreneurs who previously held back because the market had been depressed are now selling.

‘If you have cash and are able to move quickly, it’s a good time,’ he says. ‘Any business where it is easy to see future cash flow is in demand.’

Christopher Jones of business broker Sunbelt says there are lots of buyers in the market looking for the right opportunities. ‘We’re seeing buyers coming out of the corporate world looking for cash flow,’ he says. ‘There are also strategic buyers, picking up equipment.’

Kevin Uphill, managing director of business broker Avondale, says: ‘Buyers are there. After all, where do people put their cash now?’

Buyers can also try to negotiate lower rents and cheaper loans. The Government is pressing banks to lend to small firms and buyers are even finding it possible to borrow from the vendors through deferred payments.

But alongside the festive crackers there are some real turkeys with hidden problems. ‘ There are opportunities, but you have to be pretty savvy,’ says Moore.

Buying a business that has already gone into administration is fraught with difficulties as the administrator must realise funds quickly, putting a tight deadline on deals. Buyers also have to question whether a business will withstand the departure of the owner, who is often the founder.

Uphill says: ‘ The biggest single issue is the quality of the information on smaller firms – without visibility, there are high risks. There are real opportunities but if you cannot see the risks, don’t touch it.’

Many of the potential buyers are first-timers, says Jones. But this market is also proving attractive for existing businesses that are seeking to increase their market share.

Chartered accountant Russell Bowyer, 47, from Linton, Cambridgeshire, is convinced that doing deals in a recession is a good idea and he is negotiating to invest in Deep Clean, a nationwide cleaning firm that specialises in commercial kitchens.

Bowyer has a long record of business ownership, albeit in the care and accounting sectors, and he has been looking to expand his portfolio for some time.

He believes Deep Clean fits the bill because insurers require all commercial kitchens to be cleaned. There is competition, of course, but Bowyer says: ‘There is a good market.’

Bowyer, who is a client of Sunbelt, adds: ‘There are thousands of businesses for sale and far fewer buyers.

‘Interest rates are also lower so, in theory, you can get cheap money. If you buy in a boom, there is more competition from other buyers and interest rates are higher.’

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Interesting post, it’s good job
Chinese said,

Good insight.
But I think one should be risk aversive during recession time
finance articles said,

I like your articles and views. I will reflect on this issue.
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Buy Business said,

This post was very interesting as it highlighted a key issue within the buy business market, which is whether it is a good time to buy a business in a recession. I strongly agree in researching the business you are thinking of buying, as this will inform you as to the current health of the business and will ultimately help to decide whether or not the business is worth buying. I would recommend reading up on the best ways to buy a business as the better prepared you are the more likely you will succeed and make the business you choose work for you.
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It’s quite interesting because many magazines, newspapers, etc are now actually looking for their new writers via blogs
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fun team building said,

You’re better off hiring an M&A advisor to do this for you… Unless of course you don’t mind if all of your competitors know you are in the market to sell you business. If you send out letters to all of your competitors, it won’t be long before your employees know the business is on the market.
personal injury Tampa said,

The last time the US was in a recession, as I remember as a young child was in the early 90′s under the first Bush. I don’t understand how exactly a recession affects the economy, and how it differs from a depression.