Yes, a struggling or distressed business can still be sold if a buyer sees value in its assets, customers, contracts, employees, intellectual property, brand or turnaround potential. The sale may involve the whole company, selected assets or a formal insolvency process. If insolvency is a realistic concern, directors should obtain qualified insolvency and legal advice early because creditor interests and directors’ duties become increasingly important.
| Possible route | When it may be suitable | Main consideration |
|---|---|---|
| Ordinary share sale | The company is underperforming but can still meet its obligations | Buyer takes on the company’s history and liabilities |
| Ordinary asset sale | A buyer wants only the viable parts of the business | Remaining liabilities stay with the seller’s company |
| Accelerated sale | Cash or time is limited but formal insolvency has not begun | Reduced buyer competition may affect price |
| Administration sale | A formal rescue or better creditor outcome may be possible | Control passes to a licensed insolvency practitioner |
| Pre-pack administration | A rapid sale is needed to preserve operations, jobs or value | Strict process and scrutiny requirements apply |
| Creditors’ voluntary liquidation | The company cannot continue and rescue is not viable | Focus shifts to realising assets for creditors |
A company does not have to be highly profitable to attract a buyer. Its customer contracts, employees, intellectual property, stock, equipment, property, brand or market position may still have value. Another owner may also believe they can improve performance by reducing costs, introducing capital or combining the business with an existing operation.
However, a distressed business sale is different from selling a healthy company.
The buyer pool is usually smaller, the price may be lower and the transaction may need to move quickly. Directors must also consider creditors and their legal duties if the company is insolvent or approaching insolvency.
The earlier you seek qualified advice, the more options may remain available.
A struggling business can be sold if a buyer believes that its business, assets or future opportunities are worth more than the cost and risk of acquiring them.
A buyer might be interested in:
The transaction may involve selling the company’s shares, selling selected assets or completing a sale through a formal insolvency process.
If the company cannot pay its debts when due or has liabilities exceeding its assets, it may be insolvent. Government guidance says insolvency does not automatically mean the company must stop trading, but professional advice should be obtained before deciding what to do next.
|
Possible route |
What may be sold |
When it may be considered |
Main issue |
|
Ordinary share sale |
Ownership of the entire company |
The business is underperforming but can still meet its obligations |
Buyer inherits the company’s history and liabilities |
|
Ordinary asset sale |
Selected assets and operations |
A buyer wants only the viable parts of the business |
Seller retains the company and remaining liabilities |
|
Accelerated sale |
Shares or assets through a shortened process |
Cash or time is limited but formal insolvency has not begun |
Reduced buyer competition may affect price |
|
Administration sale |
Business or assets sold by an administrator |
A formal rescue or better creditor outcome may be possible |
Control passes to a licensed insolvency practitioner |
|
Pre-pack administration sale |
Sale arranged before administration and completed shortly after appointment |
Speed is needed to preserve operations, jobs or value |
Strict process, valuation and scrutiny requirements apply |
|
Creditors’ voluntary liquidation |
Assets realised by a liquidator |
The company cannot continue and rescue is not viable |
Focus is on creditor recoveries rather than preserving the company |
|
Solvent closure or asset disposal |
Assets sold before the company is closed |
The owner is exiting but the company can pay its debts |
This is not an insolvency process |
These terms are sometimes used interchangeably, but they describe different levels of financial difficulty.
A struggling business may be experiencing:
It may still be able to pay its debts and have sufficient assets.
A distressed business faces significant financial or operational pressure and may need funding, restructuring or a sale to avoid a more serious outcome.
Warning signs can include:
Government guidance describes a company as insolvent where it cannot pay its debts on time or has more liabilities than assets on its balance sheet.
Once insolvency becomes a realistic concern, directors’ priorities change. They must protect company assets, treat creditors appropriately and avoid worsening creditors’ position. These duties continue whether the company is still trading or has stopped.
A short-term cash shortage does not automatically mean the company has no future.
Equally, continuing to trade because next month “might be better” can increase losses and reduce the options available.
Directors should obtain current information covering:
A licensed insolvency practitioner and suitably experienced solicitor can then advise whether the company remains viable and which routes should be considered.
A business in difficulty is more likely to attract a buyer when it has identifiable value that can survive a change of ownership.
The company may be making losses overall while one product, location or division remains profitable.
For example:
A buyer may acquire the viable part rather than the whole company.
Customer relationships can be valuable where:
The buyer will examine whether contracts can be assigned and whether customers can terminate following a sale or change of control.
A trained workforce can be difficult and expensive to recreate.
A buyer may value:
Employment obligations and TUPE may apply in a business or asset transfer, depending on the circumstances.
A distressed company may still own valuable:
The buyer will want evidence that these rights belong to the company and can be transferred.
These may include:
Assets should be valued realistically. Book value may differ substantially from market or forced-sale value.
A competitor or adjacent business may be able to:
The distressed business may therefore be worth more to a strategic buyer than to a standalone owner-operator.
|
Value driver |
Why a buyer may care |
Evidence to prepare |
|
Contracted revenue |
May support future cash flow |
Contracts, renewal history and margins |
|
Customer relationships |
Can provide immediate market access |
Revenue analysis and retention data |
|
Skilled employees |
Reduces recruitment and training time |
Organisation chart, contracts and qualifications |
|
Intellectual property |
May provide differentiation or technology |
Registration and ownership documents |
|
Stock and equipment |
Can support continued trading or resale |
Asset register and current valuations |
|
Brand and reputation |
May help retain demand |
Trading history, reviews and customer evidence |
|
Profitable division |
Allows buyer to isolate viable operations |
Divisional accounts and cost allocation |
|
Strategic synergies |
Buyer may operate the business more efficiently |
Credible integration and cost-saving analysis |
The likely buyer depends on what remains valuable and how urgently the transaction must be completed.
Competitors, suppliers and related businesses may be interested because they understand the sector and can integrate the operation.
A trade buyer may value:
It may also be able to move more quickly than an inexperienced buyer because it already understands the industry.
Some investors deliberately acquire underperforming businesses.
They may look for companies with:
These buyers normally expect the price and deal structure to reflect the risk they are taking.
An individual buyer may see an opportunity to improve the business personally.
This is more likely where:
A private buyer may find funding difficult if the company is loss-making or has limited security.
A management team may understand the business and believe it can operate more effectively under new ownership.
An MBO can offer continuity, but funding may be difficult and any proposed transaction must be independently and properly structured where insolvency is a concern.
A customer may want to protect an important supply source. A supplier may acquire the company to preserve demand, move closer to end customers or recover value from a key relationship.
Some buyers are interested only in individual assets, such as:
An asset sale can preserve parts of the business even where the original company cannot continue.
A distressed business is not usually valued in the same way as a stable, profitable company.
A healthy company might be valued primarily using maintainable EBITDA and a market multiple. A distressed valuation may give greater weight to:
|
Valuation issue |
Healthy business |
Distressed business |
|
Earnings |
Historic maintainable earnings may provide a strong base |
Recent losses may make earnings methods less reliable |
|
Multiple |
Reflects growth, quality and normal business risk |
Often discounted for uncertainty and execution risk |
|
Assets |
May support but not drive valuation |
May become central to recovery value |
|
Debt |
Adjusted when calculating shareholder proceeds |
May exceed enterprise or asset value |
|
Forecasts |
Supported by trading history |
Likely to receive greater buyer scrutiny |
|
Buyer competition |
Broader where the company is attractive |
Often narrower because fewer buyers accept distress risk |
|
Timetable |
Seller may run a structured process |
Cash pressure may require an accelerated process |
|
Deal structure |
Greater scope for cash at completion |
Buyer may prefer an asset sale or conditional terms |
|
Seller proceeds |
May be substantial after debt and costs |
Could be limited or nil if creditors have priority |
A distressed buyer may need to fund:
It may also face a higher risk that:
The purchase price will normally reflect these risks.
Assume a company owns:
This creates a preliminary asset and commercial value of £830,000.
The buyer estimates it must also fund:
A buyer may therefore offer considerably less than £830,000, particularly if some assets are already subject to finance or security.
The seller cannot assume that the value of all assets will be added together without allowing for liabilities, funding requirements and buyer risk.
A distressed sale offer should not be compared only with what the business might have been worth when trading well.
It should also be compared with:
A lower offer may still preserve more value, employment and creditor recovery than allowing the position to deteriorate.
That conclusion should be supported by current valuations and professional advice rather than urgency alone.
A share sale transfers ownership of the limited company.
The buyer acquires the company with its:
A buyer may consider a share purchase where:
However, share sales become more difficult as liabilities and uncertainty increase.
The buyer may request:
A nominal share price does not necessarily mean the business has no value. The buyer may be accepting substantial debt and future funding obligations.
A buyer may prefer to acquire selected assets rather than the company.
These could include:
This can allow the buyer to avoid some historic liabilities, although liabilities and obligations may still transfer in particular circumstances.
An asset sale can also leave the seller’s company holding:
The seller therefore needs advice on what happens to the remaining company after completion.
Directors can sell company assets where the transaction is properly considered, documented and completed for an appropriate value.
However, directors should not move valuable assets away from creditors or favour connected parties improperly.
Under section 238 of the Insolvency Act 1986, an administrator or liquidator can apply to court concerning certain transactions at an undervalue entered into before administration or liquidation.
A sale at an undervalue may include:
Transactions with connected parties are likely to receive particular scrutiny.
Directors should obtain:
Urgency does not remove the need for a defensible process.
Where the company is approaching insolvency, document:
This can help demonstrate that directors acted responsibly rather than transferring value away from the company.
When a company is financially healthy, directors generally act to promote its success for members.
When insolvency becomes likely, the interests of creditors become increasingly important. Insolvency Service guidance states that directors must protect company assets, treat creditors equally and avoid actions that worsen creditors’ position.
Directors should not:
Professional advice should be taken early because the correct course depends on the facts and the jurisdiction.
Insolvency procedures and terminology differ in some respects across England and Wales, Scotland and Northern Ireland. This article provides a general UK overview rather than jurisdiction-specific legal advice.
The Insolvency Service recorded 2,022 registered company insolvencies in England and Wales during March 2026. Creditors’ voluntary liquidations have consistently represented a substantial proportion of recent formal insolvencies.
These statistics do not predict the outcome for an individual company. They do show that directors facing severe financial pressure are not alone and that formal procedures are established for dealing with companies that cannot continue normally.
Seeking advice early is generally more constructive than waiting for a creditor or cash crisis to determine the next step.
Administration is a formal insolvency procedure overseen by a licensed insolvency practitioner.
Under the Insolvency Act, an administrator must pursue statutory objectives in order. These include rescuing the company as a going concern or achieving a better result for creditors as a whole than an immediate winding up would be likely to produce.
Administration may be considered where:
The administrator takes control of the company from its directors and decides how to pursue the statutory objective.
Administration is not simply a way for the existing owners to continue trading without liabilities.
A pre-pack administration usually involves arranging the sale of all or a substantial part of a company’s business before it enters administration. The administrator completes the sale after appointment, often very quickly.
A pre-pack may help preserve:
However, these transactions can attract scrutiny, particularly where the buyer is connected to the former owners or directors.
Rules in England, Scotland and Wales impose requirements on substantial disposals to connected persons during the first eight weeks of administration. The administrator generally needs creditor approval or a qualifying evaluator’s report before completing the transaction.
A pre-pack should only be pursued through licensed insolvency and legal professionals.
A creditors’ voluntary liquidation, or CVL, is a process initiated by directors when an insolvent company cannot continue.
A licensed insolvency practitioner is appointed as liquidator. The liquidator realises the company’s assets and distributes available funds according to the statutory order of priority.
Government guidance describes a CVL as directors taking steps to close an insolvent company.
A CVL does not normally preserve the existing company as a going concern, although the liquidator may sell assets or parts of the operation where this improves realisations.
The result may include:
|
Issue |
Administration |
Creditors’ voluntary liquidation |
|
Main aim |
Rescue the company or improve creditor outcomes |
Realise assets and close the company |
|
Control |
Administrator takes control |
Liquidator takes control |
|
Continued trading |
May continue temporarily |
Usually limited to what supports asset realisation |
|
Business sale |
A going-concern or asset sale may be pursued |
Assets or parts of the business may still be sold |
|
Company survival |
Possible, although not guaranteed |
Company normally ends |
|
Creditor protection |
Statutory moratorium generally applies |
Claims are dealt with through liquidation |
|
Owner outcome |
Shareholder value may be limited |
Shareholders usually rank after creditors |
|
Appropriate advice |
Licensed insolvency practitioner and solicitor |
Licensed insolvency practitioner and solicitor |
Financial pressure can make it difficult to know where to begin. Start by obtaining current financial information and qualified restructuring advice before advertising or accepting an offer.
Where the company remains suitable for an ordinary sale, Valius can help introduce UK business opportunities to serious buyers through a modern marketplace.
Register with Valius to explore the appropriate next step for your business.
Valius is not an insolvency practitioner and does not replace legal, restructuring or insolvency advice. A company that may be insolvent should consult a licensed insolvency practitioner before marketing or transferring assets.
A distressed sale may need to move faster than a normal transaction because value can decline as:
An ordinary business sale may take months. A distressed asset transaction could occur much faster, particularly within a formal insolvency process.
Speed creates trade-offs.
A shorter sale period may mean:
The objective should be a controlled accelerated process rather than an undocumented emergency sale.
Potential routes include:
The sales materials should be honest about the situation.
A buyer will need to understand:
Do not describe a distressed company as a normal profitable opportunity if material facts suggest otherwise.
A business broker may be useful where:
A conventional broker may be less suitable where:
In those circumstances, a licensed insolvency practitioner or specialist restructuring adviser should usually be approached first.
A broker cannot provide insolvency advice unless appropriately qualified.
Time may be limited, but organised information can still support a better process.
Include:
Use realistic collection and payment assumptions.
Prepare:
Annual accounts may not reflect the company’s current position.
Potential causes include:
A buyer needs to know whether the cause is temporary and fixable or part of a deeper structural problem.
Analyse:
This may reveal a saleable core within an otherwise unviable company.
Confirm:
Directors should preserve:
Incomplete records can make a sale harder and create additional concerns in a later insolvency process.
Administration is not focused on protecting existing shareholders. Its statutory objectives prioritise rescue where possible and a better result for creditors where rescue is not reasonably achievable.
This distinction matters when considering a distressed offer.
Once the company is insolvent, the relevant question is not only whether the owner likes the price. Directors and any appointed office-holder must consider whether the process and outcome appropriately protect creditors.
The impact on employees depends on the transaction.
Possible outcomes include:
TUPE may apply where a business or undertaking transfers, but insolvency-related transfers contain specialist rules and exceptions.
Employee arrears may also be dealt with differently depending on the formal process and the amounts owed.
Employment advice should be obtained before communicating promises to staff or buyers.
Maintaining confidentiality may be necessary during early discussions, but prolonged silence can also increase uncertainty and employee departures. Communication should be planned with legal and insolvency advisers.
Creditors may include:
The outcome depends on:
Shareholders rank behind creditors and may receive nothing where available value is insufficient.
A sale of the business does not automatically transfer all sale proceeds to the owner.
A sale of the business does not necessarily release the owner or directors from personal guarantees.
Guarantees may cover:
Check:
Obtain written confirmation of any release. Do not assume that transferring the business automatically ends the obligation.
A business with no ability to pay wages, buy stock or serve customers is harder to preserve and sell.
Buyers and advisers are likely to discover tax arrears, customer losses and creditor pressure.
An undervalue transaction can be challenged and may expose directors to serious scrutiny.
Preferential treatment of certain creditors may be investigated in a later insolvency.
Asset buyers commonly select what they acquire. Liabilities may remain with the seller’s company.
Buyer marketing and insolvency advice are different services.
Directors should not allow creditor losses to increase without assessing whether continued trading is justified.
A lender may hold fixed or floating security and its consent may be needed for a sale.
Transactions involving directors, owners or related companies need careful valuation, process and documentation.
This may worsen the position of customers and increase liabilities.
If your business is in serious difficulty:
A distressed or struggling business can still be saleable.
The strongest opportunities normally have something a buyer can preserve or improve, such as customers, employees, assets, intellectual property or a viable core operation.
The outcome is likely to depend on:
Where insolvency is possible, consult a licensed insolvency practitioner before transferring assets, taking further deposits or accepting an offer.
Valius helps connect UK business sellers, serious buyers and advisers through a modern marketplace built to make acquisitions simpler, more transparent and less fragmented.
A marketplace listing may be appropriate where the company remains suitable for a conventional or accelerated sale. It is not a substitute for restructuring or insolvency advice.
List your business on Valius when your professional advisers confirm that marketing the opportunity is an appropriate route.