Special Situation Assets
Acquiring distressed companies, and what changes when the seller cannot wait
The thesis
Buying a distressed asset is not buying cheap; it is buying a problem at a discount. What separates a good acquisition from a bad one is the ability to distinguish a cash problem from a business problem
What the study establishes
1
An acquisition within judicial reorganisation offers protection from successor liability that an acquisition outside it does not
2
The seller's time pressure is the main source of discount, and it shrinks quickly
3
Due diligence must be completed in weeks, and that changes what can be verified
Contents
- What a special situation is
- Cash problem and business problem
- The isolated productive unit (UPI)
- Due diligence under time pressure
- The price
- The risks that remain
- The mandate