zombie handshake

In our recent blog post ‘The walking dead, we considered whether zombie companies – businesses that, although perhaps still trading, are no longer financially viable but are being “kept alive”, often by banks – are a danger to the UK economy.

We now look at the attitudes of industry figureheads towards revitalising these businesses with the aim of kickstarting the UK economy.

Polling industry leaders

At a recent ‘Resuscitating Zombie Companies’ conference, co-hosted with advisory and restructuring specialists, Zolfo Cooper, we found that industry leaders were divided about the concept of revitalising zombie firms.

What did the research reveal?

  • Industry leaders are split down the middle when it comes to agreeing whether zombies are now more of an obstacle to future economic recovery and whether capital tied up in them should be released and invested in productivity elsewhere.
  • 60% of those questioned believe the Government should not provide further assistance to UK clearing banks to support zombie firms in the future.
  • Reflecting on the statistics that reveal zombie companies have doubled since the economy faltered in 2007, 80% welcomed the banks’ patience so far, saying it has helped to limit failures and unemployment and afforded these companies the time to attract investment and start the road to recovery during challenging times.
  • Sectors that industry leaders believe to be most susceptible to zombie related problems include commercial property, retail, care homes and hotel and leisure.

What can be done?

During the conference, discussions turned to future steps that could be taken to prevent the growth of zombie companies.  With the number of UK businesses operating as zombie companies doubling during the last few years to around 160,000, those within the industry are keen to focus on a longer term resolution. Suggested measures included offering support to businesses only if there is a clear plan for recovery – allowing firms with no viability or potential to fail and better placed companies to flourish. Additional suggestions included the significant promotion of the concept of performance enhancement now whilst interest rates are low, debt forgiveness and increased open debate about potential consequences of different action.

What do you think?

Our opinion is that insolvency should not be inevitable. If decisive action is taken at an early stage, it is rare to come across a situation where liquidation is the best option. It is vital that management teams within zombie businesses are proactive and recognise that they need to adapt or innovate to bring new ideas to market. If management takes this strategy, there is often no reason why a struggling business cannot be revitalised.

We are keen to hear your thoughts so please feel free to share your views in the comment box.


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.