Begbies' recession-ready high yield

While 2015 brought the fewest insolvencies in 26 years after five years of decline, there are several reasons why this trend could soon reverse. In April, Begbies identified 21,000 UK manufacturers that are heavily reliant on exports and, given their significant levels of financial distress, "could be tipped over the edge" by Brexit. Regardless of the benefits of a fall in the pound, the potential withdrawal from the European single market may be all that is needed for business confidence to plummet. This was echoed by the insolvency industry body R3, which said the vote could "create immediate problems" for some businesses and increase the need for insolvency advice. And although Begbies is primarily focused on the domestic market, its international alliance network means it should be in a position to benefit from any rise in complex cross-border insolvency matters.

A year ago, the potential catalyst for a rise in corporate insolvencies was the prospect of rising interest rates, which threatened to stretch banking covenants and lead to defaults. Given that UK rates may now be falling, the greater potential impact on small UK companies could be a mix of regulatory uncertainty, weakened consumer confidence and - as Standard & Poor's has warned - inflation. Begbies' network of 37 offices means it is well-equipped to handle bankruptcies, forced property sales or cash flow issues for companies all around the country.

In any event, Begbies has continued the push into other professional services which started with its £8.5m purchase of property surveyor Eddisons in 2014. Since last December, the group has added commercial property auctioneers Pugh Action Group and property valuation firm Taylors for a maximum of £4.7m and £1.9m, respectively. This has come with some expansion in debt, although interest payments were modest at around £1m last year, and both deals are expected to immediately boost earnings.