Are Bankruptcy Auctions: The New Buyout Market?
Opportunities and strategies to consider when investing in distressed/bankrupt companies.
Click Here To Read About Bankruptcy Auctions & The “Booming” Buyout Market
Article Introduction (Via PEhub)
Although private equity firms have traditionally avoided turn-around situations and navigating the bankruptcy process can be intimidating, this sharp economic decline may present a unique opportunity to move outside of a firm’s comfort zone to take advantage of some significant values. Moreover, by taking a thoughtful approach to the market, PE firms have the ability to execute on some of these transactions without inordinate risk.
Article Excerpt(s) (Via PeHub)
Ideally, a PE fund can capitalize on its unique knowledge of a distressed situation to manage the 363 process to its advantage and structure a favorable deal.
The goal of the purchaser at a Section 363 sale is to take advantage of the financial distress of the debtor and the power of the Bankruptcy Code to make a safe, profitable investment. While a Section 363 sale is a complex exercise for the unwary, it can be an efficient avenue for a well-prepared buyer to acquire a financially troubled business.
Summary of Key points:
1. Use A Second Look Strategy
2. Play Your Strengths
3. Enter The Fray/Disclose Interest
4. Stalk Or Be Stalked
5. Provide DIP financing
6. Navigate The Court Approval Process
7. Analyze The Hidden Costs Of Dilligence
8. Work With Existing Management
9. Understand the risks of Free & Clear Transfers
Click Here To Read About Bankruptcy Auctions & The “Booming” Buyout Market
