‘Distress’ buys on the way down but still significant

However, the research by Experian Corpfin found that the number of “distressed deals” in early 2011 did not match the worrying levels recorded in the same period during 2009, when the economy was in recession.

The figures show that in the first half of 2011, one in eight acquisitions in the region – amounting to 16 out of 129 – involved a business in administration or other formal insolvency procedure.

This compares with one in nine acquisitions (31 out of 267) during 2010 and one in six acquisitions (46 out of 255) made during 2009 when activity was at its peak.

Andrew Walker, chairman of R3 in Yorkshire, who commissioned the research, said: “Distressed acquisitions have become a key part of the deals landscape over the past three years.

“Investors have been taking the opportunity to acquire businesses and assets while values are low and we have seen the emergence of specialist turnaround investors.

“However in recent months there have been fewer bargains and many investors are struggling to acquire credit to make a purchase.

“For those investors who have the money supply they should remain alert, as we can expect to see a continued supply of decent investment opportunities in the run-up to recovery, despite the number of insolvent deals recently falling.”

R3 is the trade body for insolvency professionals, and is made up of 97 per cent of the UK’s insolvency practitioners from all over the UK.

All R3 members are regulated by one of nine recognised professional bodies.

In June, a consumer survey carried out by R3 found that more than 80 per cent of consumers had changed the way they shopped over the previous year.

Over half of consumers were buying fewer non-essentials items, with a quarter making purchases in the sale rather than paying full price.

At the time, Mr Walker, who is a partner at law firm Irwin Mitchell, said that the most significant change was consumers shifting to the internet.

Around a third are shopping online more and this has hit retailers with a heavy high-street presence.

“These businesses have to pay rent regardless of whether they are seeing less money going through their tills, ” said Mr Walker.

“For struggling retailers the demand for rent for the quarter has made them assess their profitability, and sadly, some have realised that they are unable to continue as they are.”