Why buy a distressed business
There are many risks associated with buying struggling businesses but there are also opportunities. The main reasons why people purchase distress businesses include:
Quick method of growing to achieve critical mass;
Opportunity for improvement, return to profitability and income generation;
To prevent a competitor taking the opportunity or removing a competitor from market;
Opportunity for capital growth through a purchase, turnaround and controlled sale;
Controlled disposal of parts of the business at a premium to the purchase price; and
Usually cheaper than buying a successful business.
However, purchasing a distressed business involves a high level of commitment and the decision should only be taken after considering the risks.
