Opportunities and Risks of Distressed M&A
Deals
Distressed M&A transactions are currently en vogue
– especially in Germany. Permanent changes in the energy
sector lead to insolvencies, both in the solar industry and in
energy intensive businesses. Insolvency situations often are seen
as opportunities for investors, traditionally mostly for financial,
but more recently also for strategic buyers.
Sometimes, despite insolvency, there is a healthy and stable
core business. Also, some financial obligations (e.g. pension
obligations, a partially redundant workforce or unfavorable supply
contracts) may be left with the administrator due to the common
asset deal structure in insolvencies. In addition, for the first
three months of insolvency, wages are paid by the state. Also,
substantial discounts are granted due to the insolvency situation.
In turn, investors have to be prepared to act quickly, usually
without meaningful due diligence and accepting only
