Distressed M&A: An Overview of Deal Structuring Considerations

Summary

This practice note gives an overview of distressed mergers and acquisitions. It addresses the different methods for the purchase and sale of financially distressed companies and their assets, in and outside of bankruptcy court, and why such transactions are done. Understanding the motives of participants in, as well as the benefits and risks of, the different types of distressed M&A transactions can help a distressed company or buyer determine how best to conduct such a transaction. This practice note starts with the question of motivation: What Motivates the Buyer in Distressed M&A?, and What Motivates the Seller in Distressed M&A?. The discussion then turns to the advantages and disadvantages of the methods of doing distressed M&A, which are divided here into the following categories: