Zero To Hero - Achieving Value From Distressed M&A

Paul Elliot, Corporate Finance Partner at Baker Tilly Corporate Finance LLP, considers the issues involved in seeking to exit under-performing companies, and how to maximise value.

Introduction

Many groups and fund portfolios hold companies which are facing difficulties. With the deterioration in credit conditions – both short-term liquidity issues and longer-term rising finance cost trends – and a more challenging operating environment to come, the focus on stressed and distressed businesses will increase. Often, perhaps understandably, there is limited appetite to 'grasp the nettle', and these businesses can be left to deteriorate in the hope that performance will somehow improve. However, approached in the right way, exits can be undertaken to crystallise value, remove negative contributors to a group's earnings or fund's performance, and to free up executives to focus on more profitable