Navigating turbulence

Acquiring a target in financial distress | 5 min read

With slowing economic activity coupled with decade-high inflation and interest rates, and no sign of imminent improvement, increasingly companies are experiencing financial distress. 

“Rescuing” a company in distress can provide opportunities for buyers to pick up assets at attractive prices. However, distressed M&A is often very different to acquiring a financially healthy business and buyers need to go into these processes with their eyes open. 

Buyers of distressed assets (or from distressed sellers) will often find that they are expected to rely on a due diligence process that is limited and carried out in a compressed timescale. The speed of the sale process is driven by the distressed entity’s cash-needs and the demands and/or patience of creditors, without the protection of the customary warranties and indemnities which would be expected from a seller.

Key contacts
 

• Alasdair Steele, Corporate
• Virginie Frémat, Corporate 
• Timea Scholey, Restructuring and Insolvency
• Jamie Burgess, Corporate