Magazine article Management Today

Crash Course in ... Closing a Business Down

Magazine article Management Today

Crash Course in ... Closing a Business Down

Article excerpt

You're fighting to survive in the recession, but starting to wonder if the end is in sight for your business. What next?

Look ahead. Make sure you're aware of the medium to long-term picture, says Martin Austin, a director of business adviser Tenon. 'You need to know your long-term liabilities, such as leases or hire-purchase deals, and the timing of realisation of assets, to understand how the business is financed.'

Get expert help - fast. 'It's never premature to call in professional help,' says Malcolm Cohen, restructuring partner at accountants BDO Stoy Hayward. 'Advisers will at the very least be able to give you the comfort that you are doing the right things.'

Explore the options. Find out if the business could be sold to a trade buyer or a private equity team, or whether there's a management team that would be interested in buying. Restructuring and recovery specialists may be able to help you find a buyer. Alternative ways out could be to increase borrowing or re-capitalise the business.

Look out for red alerts. Three specific triggers mean you must contact a licensed insolvency practitioner, says Austin. 'The first is if you are unable to pay debts when they fall due; the second is if the company's liabilities are greater than its assets; the third is if you have not paid a CCJ or statutory demand from a creditor within 21 days.'

Consider emergency measures. If you know a big contract is around the corner that could save the business, consider where you might raise bridging finance till it comes through. A last-ditch measure is to obtain a loan by giving personal guarantees secured on your home or other assets, but you sacrifice your limited liability in doing so. …

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