Buying a business in administration ‘could provide great potential for profits’

Posted 20/04/2011

Purchasing a company that has gone into administration could be a good option for businesspeople, according to one expert.

John Timpson, owner of the Timpson’s shoe repair company, told the Telegraph that this kind of firm can be bought at a rock-bottom price, plus there are no contracts to tie the new owner down and no liabilities except the Transfer of Undertakings (Protection of Employment) obligations to workers.

“If you have done your homework it is often possible to turn a basket case into a very profitable business,” he commented.

However, Mr Timpson added that anyone thinking of buying a business in administration must be prepared to act quickly and make snap – but not reckless – decisions.

Last month, Mark Robotham, general manager of Escalator Investment Ready Service, told Stuff.co.nz that by driving a hard bargain and getting expert advice, businesspeople could make great profits on “stressed” firms that need a major makeover.