Business Rescue and Liquidation: Understanding the Trends and Solutions
In today’s volatile economic environment, many businesses face the difficult reality of financial distress, leading them towards business rescue (BR) or liquidation. Understanding the reasons behind these processes and the trends in this space can offer valuable insights for stakeholders and potential investors.
“Businesses enter BR or liquidation due to a mix of internal mismanagement and external economic pressures,” explains Guy Dowding , Director of Auction at Galetti Auction Listings . “Economic downturns, for instance, can drastically impact businesses, leading to reduced consumer spending, lower revenue, and ultimately financial instability.”
Reasons for businesses entering BR or liquidation include:
- Economic Downturns: Economic fluctuations can lead to financial instability.
- Poor Financial Management: Inefficient financial practices, lack of proper budgeting, and inadequate cash flow management can lead businesses into financial trouble.
- Market Competition: Intense competition, especially from new entrants or more innovative companies, can erode market share and profitability.
- Operational Inefficiencies: High operational costs and inefficiencies can reduce a business’s profitability, leading to financial distress.
- External Shocks: “Events such as pandemics, natural disasters, or geopolitical tensions can disrupt business operations and severely impact financial health,” adds Dowding.
Trends in Business Rescue and Liquidation
“In recent times, we’ve seen an increase in business rescues,” says Dowding. “More companies are opting for BR as a first step to avoid liquidation. It’s a way to save the company and its jobs while maximizing value for creditors.”
- Strategic Liquidations: “Some businesses are using liquidation strategically to restructure debt and return to profitability under a new corporate structure,” Dowding notes.
- Growing Auction Market: Auctions have become a preferred method for disposing of assets from BR and liquidation processes. “Auctions provide a transparent, competitive bidding process that often results in higher sales prices and quicker transactions,” says Dowding.
- Sector-Specific Trends: Certain sectors, such as retail and hospitality, have seen higher instances of BR and liquidation due to changing consumer behaviors and economic pressures.
Galetti’s Approach to Business Rescue and Liquidation
“At Galetti, we offer comprehensive solutions for businesses undergoing BR or liquidation,” says Dowding. “Our approach ensures that we yield the best property value through methods such as auctions, sealed bids, and private treaty sales.” Galetti provides property valuations, sale advisory, lease advisory, asset management, and portfolio optimization services.
On 20 August 2024 at 12 PM, Galetti will be auctioning several notable BR and liquidation properties at Killarney Country Club, Johannesburg. These properties include:
Unit 238, Quays, 4 Park Lane, Century City, Cape Town
A fully let investment opportunity within an office park, offering advanced corporate suites and a high annual income.
Size (GLA): 73m²
Broker: Vibeke McCleland
3 Eglin Road, Sunninghill, Sandton, JHB
Vacant A-grade offices with potential for residential conversion, strategically located with excellent amenities.
Size (GLA): 3,772m²
Broker: Tyra Ford-Hoon
49 Mokwa, Willow Park Manor Ext 65, Pretoria
High visibility industrial warehouse with long-standing retail tenant, strategically located with easy access to highways.
Size (GLA): 5,324m²
Broker: David Dawson
65 Austin Rd, Glen Austin AH, Midrand
Residential estate with huge upside potential, centrally located with additional bulk rights.
Size (GLA): 163 units
Broker: Guy Dowding
23 Wellington Road, Parktown, Johannesburg
Tenanted multi-level offices investment opportunity with a residential conversion play
Size (GLA): 3,304m²
Broker: Guy Dowding
Why Auctions are Effective
“Auctions provide numerous benefits for both sellers and buyers,” says Dowding. He highlights the key advantages:
- Competitive Bidding: It creates urgency among buyers, often leading to higher sales prices.
- Transparency: Auctions ensure a clear and open process for all parties involved.
- Efficiency: They offer accelerated timelines for sales and closings.
- Marketing Reach: Targeted campaigns attract a wide range of potential buyers.
- Fair Market Value: The competitive nature of auctions often drives prices beyond expectations.
By leveraging auctions, Galetti ensures that properties are sold efficiently and at optimal market values, benefiting both distressed businesses and new investors.
Contact us for more information and tailored solutions:
+27 82 335 1749
