The UK is the Western European capital for distressed companies according to research from independent corporate advisors Close Brothers Corporate Finance (CBCF).
The latest research revealed that over the past two years the UK has the highest percentage of distressed companies in Europe, accounting for a quarter of all distressed assets by July 2009. The figure is down from 30% during the same period last year.
Although some way off, Germany has secured second place with 14% of distressed companies in 2009, followed by Italy, which has ranked in the top three troubled countries for distressed companies in the past three years.
The UK also held the top position for leveraged buyouts more than doubling that of France which held second place. In the period January 2000 to July 2009, the UK accounted 34% of all LBOs in Europe, followed by France with 14% and Germany with 12%. Italy only accounted for 7%.
Andrew Cunningham, managing director at CBCF, said: “It comes as little surprise that the UK has the highest portion of troubled businesses given the greater leverage taken on during the bubble years of private equity.”
The European manufacturing sector has been the most severely hit in the past three years. The July numbers show that 41% of distressed companies in Europe were manufacturing based, up from 39% in 2008 and down from 49% in 2007.
As the sector accounts for 15% of gross domestic product, Cunningham commented: “The primary objective in the short term is survival. The manufacturing sector remains one of the largest employers across Europe, but it is facing the most serious issues, the long-term consequences of which will have significant detrimental effects for many years to come.”
The financial services sector has also increased its distressed assets, accounting for 2% in 2007, 15% in 2008 and 14% in 2009.