£1 Business Sales: Lifeline or Trap?
Chris Ray • 5 September 2025
Running a business under creditor pressure is one of the most stressful experiences an owner can face. HMRC petitions, supplier demands, loans backed by personal guarantees, staff who need paying - and in the background, the family home at risk. In those circumstances, many owners will grasp at any lifeline, no matter how thin.
That instinct is understandable. But rushing into the wrong kind of “rescue” can leave owners worse off, not better.
A cautionary tale
We recently held a meeting with a distressed SME where the owner, under severe pressure, sold their trading company for £1 to a turnaround buyer. The buyer promised a cash injection and help with personal guarantees. The deal was hurried through on the basis of trust, without binding protections.
On completion, the buyer took control of the business and moved existing cash into their own accounts. But the promised working capital didn’t arrive. Payroll was missed, staff were left in the dark, a critical shipment of stock remained impounded, and key supplier relationships collapsed.
The owner had given up control – but still carried the liabilities. It was the worst of both worlds.
Not an isolated case
This is not unique. We have seen other SME owners hand over their businesses for £1 in the hope of saving jobs and protecting their own position, only to find that nothing improved. In fact, it often accelerates the decline.
At the other end of the spectrum, the BHS sale by Sir Philip Green for £1 is a high-profile reminder that these “nominal value rescues” rarely deliver clean solutions. In that case, it wasn’t only the seller who came under scrutiny – the buyer too was left with liabilities, reputational damage, and ultimately parliamentary intervention.
The lesson is clear: £1 deals are not magic bullets.
Why these deals fail
The fundamental problem is structure. In moments of distress, sellers often agree to vague terms because they believe any deal is better than none. In our case above, the contract included only “best endeavours” to resolve personal guarantees. The cash injection was never documented as a requirement.
That left the buyer free to take control without delivering on their promises. Staff, suppliers, and HMRC were no better off. And the seller had no meaningful protection.
As Sandy Kinninmonth of FRP Advisory often reminds us, not everyone in this market is nice. There are genuine turnaround buyers – but there are also opportunists who exploit pressure and desperation.
What to do instead
The earlier you act, the more options you have. We often see directors delay conversations out of pride, fear of embarrassment, or the hope that “one more order” will solve the problem. By the time they seek advice, the walls are already closing in and choices are few.
Act early, and you may be able to:
- Restructure finance or negotiate with creditors.
- Arrange a pre-pack administration that secures continuity for staff and customers while protecting directors.
- Market the business to genuine buyers who can inject working capital and add value.
- Put proper legal structures in place so that if a sale does occur, liabilities are dealt with at the same time.
All of these outcomes are preferable to a last-minute, ill-structured £1 rescue.
The real message
If you are facing creditor pressure, don’t leave it until the last minute. Talk to professional advisers – legal, financial, and insolvency – while you still have options. The first call is the hardest, but it is also the most valuable.
At Branta, we work alongside restructuring specialists like FRP Advisory to ensure that business owners are protected and that transactions are structured properly. Our role is to find genuine solutions that give businesses a chance while safeguarding directors from the risks of rushed decisions.
A £1 sale may sound like a lifeline. In reality, it is often a trap.
Discover who’s buying UK businesses in 2025. Key trends, top acquirers, and sector insights for SME owners considering their next move.
Buying a business out of insolvency isn’t easy — but with the right advice, it can unlock huge value. Read how Branta helped rescue jobs and revive a business.
What the Slowdown in Deals Means for Ambitious Business Owners
What Companies House’s New Rules Mean for Small Businesses
Branta has been awarded the contract to lead the acquisition search for a profitable, privately-owned UK technology group. Their brief? Find strong, B2B-focused businesses in managed IT, connectivity, or cybersecurity that are open to a sale.
Last week, the UK economy managed to surprise us all with modest 0.7% GDP growth. It’s a figure that brought a flicker of optimism (however fleeting) for businesses worn down by years of instability. But scratch beneath the surface, and the message from our clients across the South is crystal clear: uncertainty remains.
Why a connected-party sale preserved value, protected jobs and gave a struggling manufacturer a new lease of life
What's going on? If you’ve been watching the news or even just your cost of importing parts or raw materials, you’ll know that things are getting… spicy. The Dollar has taken a knock, the Pound is holding strong (for now), and the Euro is nervously watching from the sidelines. This is no ordinary market flutter — it’s the prelude to what’s being dubbed “Liberation Day,” thanks to the Trump administration’s announcement of sweeping new tariffs. So, what does it mean for you, the UK business owner? Let’s break it down. The Tariff Trouble: What’s Triggered It? Over the weekend, Donald Trump confirmed the US will impose reciprocal tariffs on all countries, effective 2nd April. That includes the UK, EU, Canada — the lot. Markets reacted quickly and nervously. The US Dollar index slipped for the third day running, while Sterling held relatively firm and even gained ground on the Dollar and Euro. Tariffs are set to hit EU car exports first, with a flat 25% on any vehicle not made in the USA. The EU has already promised retaliation. So, we’ve got: A potential full-blown trade war brewing. Worries about global inflation returning. Investors pulling back from risk. UK and EU exporters in the crosshairs. How Currency Is Moving – And Why It Matters USD : Investors are ditching the Dollar. Why? Because tariffs risk economic growth and may force the Fed to hold off further rate hikes. The greenback has lost ground against both the Yen and Sterling. GBP : The Pound is surprisingly stable. Prime Minister Starmer’s “productive talks” with Trump didn’t prevent the tariff threat, but Sterling has remained above 1.29 against the Dollar and 1.19 against the Euro. EUR : The Euro has crept up slightly — mostly because the Dollar is wobbling. But with Germany heavily reliant on car exports to the US, this trade standoff could hit the Eurozone economy hard. To add fuel to the fire, the ECB just cut interest rates by 25bps, and may need to go further. What Does This Mean for UK SME Owners? If you’re importing goods priced in USD or exporting to Europe, the FX markets are going to start affecting your margins — if they haven’t already. Let’s take a couple of examples: Importer of electronics or components from China or the US : The weakening Dollar might look helpful — goods priced in USD cost less in GBP. But beware: tariffs could push base prices up. Exporter of UK-made machinery to Germany : The Euro’s wobble could make your goods relatively more expensive in Europe, even before EU retaliation hits confidence and demand. Don’t Panic — But Do Prepare This isn’t a time to bury your head in the sand. You don’t need to be a currency trader to manage FX risk — but you do need to be aware. Here are a few practical steps to consider: Review your foreign currency exposure : Which contracts, invoices or suppliers are USD or EUR-denominated? Talk to your bank or FX provider : Ask them about forward contracts or hedging tools. Scenario test your pricing : How sensitive are your margins if GBPUSD hits 1.25 or EURGBP shifts to 1.10? Watch out for knock-on effects : Global inflation, slower growth, tighter credit — it all filters down to SME trading conditions. The Bigger Picture We’re heading into a volatile Q2. The FTSE 100 dropped nearly 1% on Monday, and financial stocks are feeling the squeeze. Risk appetite is down. This isn’t just a blip — it’s policy-driven turbulence, and it could persist well into summer. UK SMEs — especially those in manufacturing, import/export, or with international supply chains — should keep close tabs on currency movements and trade policy headlines. Self-Test: What Should You Be Asking Yourself? How much of my revenue or cost base is exposed to USD or EUR currency movements? Have I reviewed my pricing strategy in light of recent FX volatility? Am I using any FX tools to hedge risk, or am I leaving it to chance? What would a 5–10% swing in either direction do to my cash flow or profitability? Final Thoughts It’s tempting to assume that trade wars and currency swings are for the “big boys” to worry about. But for many SMEs, this sort of disruption can mean the difference between hitting your profit targets or missing them entirely. At Branta, we help businesses like yours navigate financial uncertainty, structure for resilience, and plan for sustainable growth — even in volatile conditions. If you’d like a no-obligation chat about your FX exposure, debt refinancing options or M&A strategy, give us a ring . We speak fluent SME.
Branta supported a Hampshire-based BCorp haircare manufacturer, in achieving a successful strategic sale after a previously stalled process. This case study outlines how Branta structured the outreach, managed buyer interest, and helped deliver the right exit for the business and its shareholders.
Introducing Our New Series: “Global Markets & FX” As part of our ongoing commitment to helping UK SME owners navigate the financial landscape with clarity and confidence, we’re launching a new type of blog post. Each week, we’ll deliver a concise, jargon-free summary of global economic events that may influence foreign exchange (FX) markets — and, by extension, your business. Whether you’re importing machinery from Germany, exporting craft gin to the US, or simply trying to manage your overseas supplier contracts, FX fluctuations matter. And understanding what’s driving those movements can give you a real edge. This Week in Brief The US Dollar remains strong amid confusion over President Trump’s looming reciprocal tariffs. The Pound is holding firm , but the UK Spring Statement on 26 March could shift sentiment quickly. The Euro retreats , as EU braces for the economic impact of a US-EU tariff clash. Let’s break it down and look at what’s driving the numbers — and what it could mean for your business. 🇺🇸 US: Trump’s Tariff Tensions Rattle the Fed The US Dollar Index remains above 104, showing sustained strength. But behind that steady number is a volatile political situation. President Trump’s proposed reciprocal tariffs — set for an announcement by 2 April — have markets guessing. Will it be a broad-based tariff hike? Or something more targeted? He hinted at “flexibility”, but few are reassured. The Federal Reserve, understandably, seems as baffled as the rest of us. Fed Chair Jerome Powell admitted: “It’s just… really hard to know how this is going to work out.” The Fed’s main concern? That trade tensions will fuel inflation while weakening growth — a nasty combination that’s difficult to manage with interest rate policy. They’ve cautioned that sudden shifts in market sentiment could spook global capital flows. What this means for SMEs: If you’re buying from US suppliers or have customers paying you in dollars, the strong USD could squeeze margins. On the flip side, UK exporters may become more competitive in the US market if sterling stays weaker. 🇬🇧 UK: Steady for Now — But the Spring Statement Looms Sterling has been surprisingly stable. GBP/USD is sitting around 1.2950, and GBP/EUR has moved back above 1.19. This is largely down to the Bank of England’s decision to hold interest rates — but not without some internal drama. Key takeaway? Catherine Mann has pivoted away from the dovish camp, suggesting that further rate hikes aren’t totally off the table. But, much like their US counterparts, BoE officials admit they’re unsure how US tariff policy will ripple through global trade and affect UK inflation and growth. The Real Test: Chancellor Reeves’ Spring Statement (26 March) UK public finances are on a knife edge. With borrowing costs rising, Reeves is likely to announce tough decisions — either cuts, taxes, or a blend of both. Most analysts expect tax rises later in the year unless there’s a surprise surge in UK growth. This week is also packed with UK data: Wednesday: CPI & RPI inflation figures Friday: Retail sales and GDP data What this means for SMEs: If you’re operating on thin margins, watch out. Rising interest costs or inflation-linked supplier pricing could force tough choices. Also, any hint of tax hikes could weigh on business confidence — or bring forward investment decisions. 🇪🇺 Europe: Tariff Talk Hits the Euro The Euro dropped back below $1.085 after a brief rally, thanks to comments from ECB President Christine Lagarde. The trigger? A 25% US tariff on EU goods could shave 0.3% off Eurozone growth in year one — and 0.5% if the EU retaliates. Her message was blunt: there would be a short-term hit to output, but inflationary effects wouldn’t last — meaning the ECB sees little reason to raise interest rates in response. ECB board member de Galhau even suggested they may cut rates further , underlining the different trajectory compared to the US. Key Data This Week: Eurozone PMIs: Watch for business confidence across France, Germany, and the broader region. Inflation: France and Spain will report this week. Germany’s IFO and unemployment data will offer further insight into Europe’s industrial powerhouse. What this means for SMEs: If you rely on imports from the EU — or sell into it — the falling Euro could impact your pricing models. It’s also worth keeping an eye on sentiment: lower confidence in Germany often sets the tone for wider EU demand. What Should UK Business Owners Do Now? FX movements often feel like background noise — until they hit your bottom line. With tariff uncertainty, differing interest rate paths, and political unpredictability, it’s more important than ever to build resilience. Here are a few simple ideas: Review your FX exposure – both incoming and outgoing payments. Talk to your accountant or adviser about whether forward contracts could protect your margins. Keep an eye on data drops (like CPI, GDP, and PMIs) to anticipate volatility. Self-Test: Is Your Business FX-Ready? Ask yourself the following: How much of my revenue or cost base is exposed to foreign currencies? If the GBP were to move 5% against the USD or EUR, how would that affect my margins? Do I have any contracts that lock me into specific exchange rates or payment schedules? Am I regularly reviewing FX risk with my finance team or adviser? Final Thoughts We’ll be back next week with another round-up. Think of this series as your Monday “heads-up” — a quick scan of what’s happening around the world, and how it might ripple through to your business here in the UK. If you’d like to speak to us about FX strategy, hedging options, or broader financial planning, we’re always here to help.
