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The very nature of business makes it most unlikely that any enterprise would advise potential investors of any adverse financial issues even if some creditors may feel it would be an honourable gesture.

The nearest potential customers can get to obtaining knowledge about the financial status of a company is to actually examine the accounts which are published at Companies House. Checking through the ‘dirty linen’ may well appear a trifle tedious but, there again, why would anyone consider investing in a company without doing so.

Commenting, Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency said, “Directors and shareholders of a limited liability company are not punished if a business becomes insolvent except where dodgy dealings have been uncovered. Nevertheless, it makes good business sense to thoroughly investigate any potential investment opportunity rather than attempting to recoup monies after insolvency has occurred.”

Whilst the economic downturn is hurting many, private investors and buyers of businesses with cash certainly stand to make some good profits if they take advantage of increased opportunities to perhaps purchase undervalued businesses. For these people, the choices as to which investment to make, how to make that investment, and timing is the key.

Mr. Irwin believes that investors should always allow themselves a considerable margin for error as, in reality, when buying an underperforming business nothing is likely to work out as well as possibly expected.

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About the author

Gerald Irwin

Gerald Irwin is founder and director of Sutton Coldfield-based licensed insolvency practitioners and business advisers, Irwin Insolvency. He specialises in corporate recovery, insolvency,
 rescue and turnaround.