Diamonds in the Rough Series | FTI Consulting

Diamonds in the Rough

Corporate Finance & Restructuring

February 27, 2019

Diamonds can be found in the most obscure and hard to find places. Failing businesses, whilst often raising a myriad of red flags, can also on occasion be a gem worth investing in. Most investors are concerned when it comes to buying distressed businesses, however, if assessed and transacted appropriately, significant benefits can be obtained through purchasing a business on the rocks - even those subject to an insolvency proceeding.

In this series our experts look at the various stages and challenges stakeholders go through when buying or selling a distressed business, including:

Article 1 - Buying a distressed business
The true value of a distressed business (or lack thereof), is often only discovered by experienced investors and advisors. However, with the right advice around price and the associated terms, buyers may just find themselves presented with a diamond in the rough.

Article 2 - Using deeds of company arrangement
The DOCA process, when used effectively, can provide an innovative mechanism for creating and extracting value through the acquisition of distressed businesses. This article looks at the key challenges to be aware of when considering the DOCA process.

Article 3 - What to look for during due diligence
After identifying a distressed investment opportunity, it is critical to perform an abbreviated due diligence of a distressed investment opportunity to quickly determine whether turnaround strategies can be implemented to drive profitable growth and create a ‘gem’ of a business.

Article 4 – Preparing a business for sale
In this article, the critical steps owners should undertake to prepare, plan and structure a distressed business for sale are contemplated. Having a turnaround plan in place demonstrates to buyers that untapped value still exists and the potential to return the business to a profitable state is possible.

Article 5 - Selling distressed businesses
Transacting a business that is in some form of distress requires an approach different to that normally adopted during the sale of a business, and if done correctly, value can still be extracted.

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