ACQUISITIONS of insolvent businesses in the North East fell in 2010, according to new research.

In 2010, 14 deals in the North East involved companies bought out of administration or other formal insolvency procedures, equivalent to one in eight of all mergers and acquisitions.

This compares to 21 such deals in 2009, or one in five of all regional acquisitions. In the first half of 2008, just one in 17 deals involved a distressed business, rising to one in eight in the second half. The research was conducted by Experian Corpfin on behalf of insolvency trade body R3.

Linda Farish, chairman of the North East arm of R3 and director of recovery & insolvency at Newcastle-based accountants RMT, said: “Insolvent deals have been running at high levels since mid-2008, when the economic problems began to set in. Recently the position has stabilised. Buyers who have access to funding have been taking the opportunity to pick up the assets of insolvent businesses while values remain low.

“The fall in distressed deals in the past six months may reflect the fact there have been fewer insolvencies, and therefore fewer distressed businesses coming to the market. However, potential buyers should be aware that the past has shown that in a recovering economy there is still a window of opportunity to acquire businesses that require additional capital investment and a sound management structure to return them to profitability.”