IFT to launch investigation into zombie companies this week
By Susan Moor | Published: 30 January 2012 | Comments (0)
Thousands of firms have become paralysed by debt with the problem set to spiral out of control as Britain stands on the brink of a double-dip recession.
The number of ‘zombie’ firms – which are capable only of servicing interest repayments and little else – is ‘mushrooming’ and unlikely to ease during a recovery that could perversely force cash-strapped firms into receivership.
This is Money, 29 January 2012. Read the full article
These figures from the IFT are not surprising – we have witnessed the steady rise of the so-called zombie companies over the past two years. What comes through from this announcement, and when we talk to companies locked in this situation and potential funders, is the need for a strong, viable business plan. Often what these companies need as much as capital is operational change. This has led to a jump in demand for experienced interim or turnaround managers – we have found increasingly that it is possible to secure debt and equity funding for a zombie business, where the underlying business case is strong and an interim manager is in place to guide the company successfully through operational transition.
Susan Moor