Key Considerations In Distressed M&A Transactions

The good news with respect to the mergers and acquisitions market is that in spite of terrible economic conditions there are still opportunities, particularly for the acquisition of "distressed" companies. The bad news, of course, is that M&A activity declined significantly in 2008. Merger stat reports year to date deal value for U.S. and U.S. cross-border transactions at $887.2 billion (as of December 9, 2008), a 33% decline over 2007. To put those statistics into perspective, 2008 will represent the fifth largest year over year decline in deal value in the last 25 years – 1990, 2001, 2002 and 1991 saw greater percentage declines (51%, 46%, 35% and 34% respectively). The bottom line is that it has been an extremely difficult year for the M&A market for a variety of reasons and the market is unlikely to improve dramatically anytime soon. A primary factor for the reduced deal activity is the debt market liquidity crisis which has posed a significant obstacle