A business needing turnaround equity generally has to secure this quickly. So these businesses need to speak to potential funders who both understand this area and its risks and limitations, and who are prepared to move swiftly enough to make a deal work. This article covers what distressed equity investors exist in the UK and how to obtain turnaround investment.

With turnaround equity as with any other area, potential investors break down into a number of categories:

Business Angels

Business failures and new business start-ups are favourite Government statistics. Looking at the research, one of the key findings is that only one in five (19%) of those businesses starting-up will survive to their fifth birthday (Warwick Business School). Also, wise and experienced 50 to 55-year-olds stand a better chance of producing surviving businesses than the young, thrusting, would-be entrepreneurs in their early 20s. On reflection, the statistic makes sense.

Angel investment can be a time consuming and complex endeavour.  As a result there is a growing trend for angel investors to act in a syndicate.  William Robins explains how angel syndicates work and their benefits.

What is an angel syndicate?

Figures just released from the Asset Based Finance Association (ABFA) show invoice finance is out performing all other types of business lending. Total advances from members have grown 9% year on year, whereas bank lending actually contracted by 2.5% in the same period.

The latest quarterly industry report from the ABFA shows turnover growth of 15% year on year, with total client sales in the quarter of £55.8bn.

As part of their commitment to lending £190 billion to businesses in 2011 – including £76 billion to small and medium-sized companies – the ‘big five' banks have pledged to lend £19 billion in the first three months of the year. However, just £16.8 billion has been lent.

Turnarounds are normally thought of as involving businesses which have fallen into distress or crisis as the result of an inexorable process of underperformance and decline. In fact a large proportion of the cases that turnaround firms actually deal with are companies which are actually doing very well in terms of increasing sales, and sometimes even profits. The issue in these cases is that they have become victims of their own success as excessive rates of growth has led to overtrading.

Dealing With Financial Overtrading

Two years after the Small Business Act entered into force the European Association of Craft, Small and Medium-sized Enterprises has identified a number of measures that need to be taken by the EU and national policy makers if the SBA is going to have any teeth.

Having survived two recessions and read about many more, writes David Rawlings of www.businesscarfinanceltd.co.uk, I know that this industry is one of the most cyclical. Typically we all become depressive as sales slow and costs increase, then we toast our amazing foresight when residual values improve and interest rates fall.

So instead of ignoring or joining in with the doom mongers use the current financial situation to your advantage and enjoy the benefits of good fleet management.