Buying a business from administration – how to stand out from the crowd
Although buying a business from administration is different from buying direct from a seller, administrators will still be looking for certain characteristics from a buyer when considering their options.
Standing out from the crowd, particularly when it comes to bagging yourself a great deal, is highly important. But how do you make sure that it’s your bid that gets noticed among all the other interest?
Look at the process like it’s a job interview
If you think a business that has fallen into administration represents a fantastic opportunity for a turnaround project, it’s unlikely that you’re the only one. You may find that you are joining a queue of other bidders all wanting to grab a bargain and use their expertise to bring the business back from the brink.
This may sound a little strange, but if you consider your attempt to buy a bargain business as a job interview where you need to demonstrate your suitability for the ‘job’ of being the new owner of the business, then this can help to focus your mind.
If there’s a few contenders wanting to buy a business you are interested in, think about how best to show how your skills align with those needed to make the business a success once more. Sure, selling a business out of administration is partly driven by the amount someone is willing to pay – there are, of course, creditors in the mix. However, when it comes to saving jobs and turning the business around, even creditors are likely to want to opt for someone with the right experience and expertise over a novice or a chancer.
- Demonstrate your experience
If you’re able to include information in your bid, about any past turnaround success, this is bound to put you ahead of competition that hasn’t done this before. If you’re a seasoned turnaround expert, don’t leave this information out of the offer process. Talk it up and ensure the administrators know that your experience means you can be depended on to get results.
- Talk about your education
As with a job interview, education does come into it. This is particularly true if you have some relevant qualifications, for example. Also, if you want to buy a business from administration, but have little experience, talking about educational achievements might ensure you can stand a chance against other less qualified buyers.
- Offer information about other businesses
If you run other successful businesses, or have in the past, offer these as examples of how you can be depended upon to do the job well. Be open and honest and show you have nothing to hide.
- Show that you have done your research
When attending a job interview, everyone knows it’s a good idea to have researched the business – this is also obviously true of anyone hoping to buy a business. If you can’t show that you have a full understanding of the business’s issues, why it ran into problems in the first place and how you intend to solve these problems, then you may have little chance of successfully buying that business.
A big part of this is also to show a willingness to learn more, by asking plenty of questions whenever you get the chance. Make sure you find out where the business went wrong, its biggest challenges, its former managing team and their performance, retained staff, suppliers, contract, customers and everything else that’s intrinsic to running the business.
When buying a business from administrator, you don’t necessarily have the advantage of working with people that know the business well, so when you have access to people with insider knowledge, pick their brains.
Don’t forget about the people
This is a key element when trying to ensure you are able to buy a business out of administration when faced with competition. It’s not all about the money, those selling the business will also want to hear about your plan for the staff now under the administrators’ responsibility. Once administrators have been called in, they will often decide to retain the staff that the struggling business employs and they will want to ensure that any buyer takes a responsible approach to taking over these employment contracts.
A good way to show that you understand the importance of the business’s staff is to demonstrate a good working knowledge of the Transfer of Undertaking (Protection from Employment) Regulations (TUPE) regulation.
Make yourself available
Ensuring that you are always on the other end of the phone or email whenever one of the administration team has a question or query, can really help your cause. Buyers who show that they are keen by always being available can result in a positive decision, especially when combined with a gently persistent approach from the buyer.
There are several ways to show persistence without becoming a pest. Asking questions can be a good way to ensure the administration teams know you are still interested, after a week or so of no contact. As sales from administrations move very fast, when compared with standard business sales, it’s important to show willingness and ability to move as quickly as necessary and being available at all times and showing persistence is key to this.
All of this may seem like a bit of a headache, but for the right business it really is worth following these rules to make sure you stand out from the crowd. Just because a business has fallen on hard times and has narrowly avoided insolvency, this doesn’t mean it has no value. For the right opportunity, other buyers will have a similar vision and even similar experience, so it takes something special to gain that edge and ensure your offer is the one that is accepted.