Distressed M&A

During a recent Q&A with Financier Worldwide, Ben Hughes from FTI Consulting’s Corporate Finance team reflects on the current outlook for distressed M&A, sharing insights on new opportunities and challenges for distressed investors. Ben was joined by a panel of leading thinkers.

This is an extract from Financier Worldwide, first published in December 2022. The whole article is available at https://www.financierworldwide.com/roundtable-distressed-ma-dec22#.Y3zConbP1aR

“FW: Based on your experience, what particular considerations need to be made when structuring and financing a distressed M&A deal? How do aspects such as valuation and risk management directly impact return on investment?

Hughes: We always encourage potential purchasers to remain open minded when it comes to structure, as creative solutions often deliver the optimal solution for both buyer and seller. Adopting a narrow-minded approach where only a vanilla share sale or business and assets sale are considered can result in a missed opportunity to unlock further value. When it comes to financing, offers subject to securing funding are not viewed favourably by the sell-side in a distressed M&A process, so having sufficient capital to drawdown for the purchase price and post-transaction funding is paramount. One thing to bear in mind is that the funding need is often greater than expected given some of the operational and stakeholder issues that can arise in the months following the acquisition.”

This article has been reprinted with kind permission from Financier Worldwide.