Zombie firms are the walking debt!

Zombies at Royal And Derngate Theatre. Zombies in foyer before "Thriller" production.
Zombies at Royal And Derngate Theatre. Zombies in foyer before "Thriller" production.

BUSINESS advisors in Milton Keynes are seeing an increase in a terrifying phenomenon – zombie companies.

Zombie firms, mainly in retail, travel and leisure sectors, have low or no profitability and are finding it difficult to repay loans or restructure.

Steve Elsigood, who is restructuring director for advisors KPMG in Milton Keynes, believes a rise in interest rates could kill off the zombie firms if they aren’t able to fundamentally change.

Meanwhile KPMG says a survey of business advisors has found companies in Milton Keynes are struggling to maintain confidence in the economy.Rising inflation is one of the biggest threats to local businesses, they say.

Barbara Anderson, from KPMG’s advisory team in MK, said: “In order to stay competitive, businesses will need to maintain a ruthless focus on the bottom line, and look for further sustainable ways of driving out cost from their organisations.”

She advised firms to consider cloud computing, joint ventures, strategic alliances and outsourcing as ways to save money.

A poll carried out by business solutions firm PwC found confidence in the economy has risen but only from 27 per cent to 31 per cent in six months. Fewer advisors believe the private sector can pick up the slack of public sector cuts.

Some 26 of the region’s senior lawyers, bankers and other advisors were surveyed at an event held at University Centre Milton Keynes.

Added to this, recent research from Grant Thornton, which has a big presence in the new city, found businesses in the UK were among the least optimistic in the world in the second quarter of 2011

But Grant Thornton partner John Corbishley said: “It’s important not to completely ignore the positive signs.”