Budget will keep insolvency advisers busy, says Begbies Traynor

The budget was “the last straw” for many companies, the boss of one of Britain’s go-to corporate restructuring firms has claimed, and the number of businesses falling into financial difficulty is likely to remain elevated as a result.
Ric Traynor, executive chairman of Begbies Traynor, said the chancellor’s decision to increase employers’ national insurance contributions would be likely to cost his company about £1.25 million a year.
He suggested, however, that Begbies could end up being a net beneficiary of the budget changes because his insolvency specialists had seen an increase in activity over the past few weeks as business owners grappled with the extra costs.
“We’ve definitely seen an increase in activity since [the budget] from those very marginal businesses which are heavily people-cost based, who’ve come along and said, ‘Well, we just can’t see how we’re going to cope with this, it’s the last straw,’ ” Traynor, 64, said.
He expects companies in the retail, hospitality and construction industries in particular to struggle, given that they generally employ lots of people, often on the national minimum wage, which is also going up.
Begbies Traynor employs a thousand or so people in its offices around the UK. Insolvency is what Begbies is best known for and it is the group’s largest service line, but it also has teams of accountants, chartered surveyors, bankers and lawyers who advise businesses on subjects including forensic accounting investigations, commercial property valuations and restructurings.
During the pandemic, the insolvency and administration market was relatively slow as struggling businesses were kept afloat by generous government support schemes but high inflation, the rapid rise in interest rates and cooling of the global economy over the past 18 months or so has increased Begbies’ workload.
Worcester Warriors rugby club and the stationer Paperchase are two administrations that the company has worked on over the past year and it has also handled the receivership of Britishvolt’s electric battery site in Northumberland.
Traynor described it as a “perfect storm for businesses”, some of which he expects will find it difficult to also stomach increases in their national insurance contributions.
Begbies has been adding more insolvency specialists to its business recovery team to help it to take advantage of the “continued favourable market conditions”.
Between May and October, the first half of its current financial year, the group’s revenue and profit before tax increased by 16 per cent compared with the same period last year to about £77 million and £11.5 million, respectively. Traynor said it had been a very good six months of trading, with the increase in revenue and profits “driven by positive momentum across the group”.
The board said it was “confident of delivering market expectations” for its current year and investors and analysts are hoping for an adjusted pre-tax profit of about £23.7 million. In its last financial year Begbies delivered an adjusted pre-tax profit of £22 million. If it hits its target this year it will be the eleventh year in a row that it has grown the bottom line.
Analysts nudged down their forecasts for 2026 and 2027, however, in the light of the additional £1.25 million of taxes Begbies will have to pay each year from next April. Traynor said he was looking at ways of mitigating that impact, including fee increases, although he would try not to resort to lower salary increases for his staff.
“We’re in a market for people with talent and we want to keep our people happy and keep them with us,” he said.
Begbies shares closed up 1¾p, or 1.9 per cent, to 95½p, valuing the business at £147.8 million.