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Insolvent deals double in a year

Acquisitions of insolvent businesses in the UK have more than doubled over the past year and remain at high levels, according to research into mergers and acquisitions by Experian Corpfin on behalf of insolvency trade body R3.

During the fourth quarter of 2009, 67 out of the 630 deals completed in the UK – one in nine of all deals – involved companies acquired out of administration or other formal insolvency procedures.

During the year as a whole, there were 345 acquisitions of distressed businesses, amounting to one in every eight mergers and acquisitions.

This compares to 2008 when there were 159 distressed acquisitions, accounting for one in 27 mergers and acquisitions.

Peter Sargent, R3 president, says: “Acquisitions of insolvent businesses have risen significantly and remain high. While pre-pack administrations may account for some of these deals, others will be acquisitions by canny buyers taking the opportunity to pick up bargains while values are low. Either way, these statistics represent businesses being given a second chance of survival.”

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