Private Equity Investors | Lenders (including Directors owning and investing in their own businesses)
A very significant percentage of businesses funded by private equity houses and high net worth investors (at some stage) become insolvent.
In fact in recent studies the BVCA estimates that between 50% – 75% investee companies go through an insolvency.
There appears to be 2 principal reasons.
- Over leverage – especially in buy outs
- Investee companies not reaching envisaged performance levels
From our experience private investors often take a remarkably passive role when an investee company runs into distress and insolvency. The logic behind this passive behaviour is that they believe they are under where the “value breaks”. However, often there is a lot of input and value to be extracted out of distressed investments.
When to call Us
As always the earlier you call us the better. Usually there are 3 key times to speak to us.
- When you are making the investment – To identify how you can maximise your recovery if things go wrong both in terms of your involvement in the business and your security. Bizarrely and frequently overlooked this applies equally to investments by the existing owner | management.
- As soon as you are aware that the investee company is financially distressed and may face possible insolvency – This is very important as it allows you to potentially influence or dominate the outcome.
- Whenever you see any potential distressed business or asset that potentially you want to acquire – We can help you to structure that investment to minimise the cash out and minimise the risk. This can produce spectacular financial results.
Why Use Us and What’s in it for You ?
- Having acted as distressed debt and | or equity investors many times ourselves we understand the issues.
- Some firms have recurring relationships with banks so they are primarily motivated to recover funds for the bank and preserving those long standing relationships as opposed to enabling you to tunaround your distressed investment.
- Some firms are affiliated with or are in fact insolvency practitioners and cannot therefore act in your best interests when they are statutorily obliged to act in the best interests of creditors and not maximise your return on your investment.
- There are many circumstances where investor entrepeneurs can feel badly done by, so it’s prudent to guard against this by choosing an independent firm. If one of your investments is in distress and likely to face insolvency and there is a bank involved, you need an independent specialist advisor to protect and enhance your position.
- We know all the key players in this field and whether they are equity or debt providers, we know their investment or lending sweet spots and when they are not prepared to invest. This assists in deal making.
- And for more reasons why to use us Click Here.
The Venture Consulting Team