Distressed deals offer the highest returns--
but only for buyers who understand the restructuring maths.
Acquiring companies in crisis is a discipline of its own. Time pressure, liability risks, asymmetric information and insolvency proceeding dynamics require specialised transaction competence - otherwise the bargain price becomes the most expensive investment.
Crisis-proven. Insolvency-law-proof. Restructuring-strong.
Why distressed deals work differently
I have the opportunity to acquire a company out of insolvency but am unsure which risks I'm buying into.
I want to structure a distressed acquisition as an asset deal but don't know which liabilities transfer regardless.
The time pressure in insolvency proceedings is enormous - I need an accelerated that is still reliable.
I see a company in distress and want to assess whether a transfer restructuring or insolvency plan is more sensible.
Does this sound like your situation?
Let's clarify in a free initial consultation whether and how we can help.
Distressed M&A: transaction forms and legal framework
Our distressed M&A approach
Rapid assessment
Analysis of crisis causes, restructuring viability and acquisition alternatives: transfer restructuring vs. insolvency plan vs. StaRUG proceedings.
Accelerated due diligence
Focused DD under time pressure: red flag analysis instead of full review. Concentration on liability-relevant risks, employment relationships and contract landscape.
Valuation and pricing
Liquidation value vs. going-concern value. Consideration of restructuring costs, workforce adjustment and working capital needs in the purchase price model.
Transaction and restructuring
Negotiation with insolvency administrator or debtor. SPA design with distressed-specific clauses. Post-closing restructuring roadmap.
- Restructuring viability assessment and acquisition alternatives analysis
- Accelerated red flag due diligence
- Liquidation value and going-concern value assessment
- Post-closing restructuring roadmap
Typical distressed M&A results
Purchase price discount vs. normal value
Typical transaction duration
Return multiple upon successful restructuring
Restructuring success rate
Purchase price discounts and returns depend on crisis cause, sector and restructuring complexity.
What does a poorly prepared distressed deal cost?
- Liability surprises: Unrecognised Section 613a liabilities can cost millions - personnel costs that should have been excluded in the asset deal.
- Avoidance risk: Pre-insolvency transactions without avoidance review risk complete unwinding.
- Restructuring failure: Without a robust restructuring plan, 40% of all distressed acquisitions fail within 24 months.
- Value destruction: Too-slow negotiations in insolvency lead to substance loss - every week of delay costs customers, employees and supplier relationships.
Frequently asked questions about distressed M&A
Further M&A topics
Spotted a distressed opportunity? We make it transaction-ready.
We support the entire distressed M&A process - from rapid assessment through accelerated DD to closing and restructuring roadmap.
Related Topics
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