The Mirus Special Situations Group

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Acquisition Advisory

A strategic acquisition is a complex undertaking that requires substantial due diligence and careful planning in order to be successful. So how does a company acquire a distressed company successfully?

First, it is important to understand that speed, efficiency, and experience are all valuable attributes of a successful bidder. If speed counts for the seller (which is typically the case for any distressed business), then the first buyer to show up with a reasonable offer has a distinct advantage.

  • Speed: To act fast without acting foolishly, a successful buyer needs to deploy more resources on a distressed opportunity. Otherwise, it is impossible to complete the necessary due diligence on a compressed time schedule. If it were your intention to treat distressed situations like a typical acquisition process (complete with exclusivity periods and detailed due diligence), your efforts will be frustrated by more agile buyers who are willing to accept more risk.
  • Efficiency: Evaluation, approval, legal review, and other steps that would typically be sequential, must happen simultaneously. A distressed sale process (particularly in the bankruptcy context) will typically progress twice as fast – or faster – than a sale process for a "healthy" company.
  • Experience: Hire competent, experienced advisors. First call: insolvency counsel. Distressed companies typically follow a playbook well known to work-out specialists, bankruptcy attorneys and their ilk, but completely foreign to even the most experienced M&A attorney. Other key advisors include a turnaround professional or investment banker with experience in acquiring distressed companies. Distressed assets, equity or debt can be acquired in myriad ways, each with advantages and disadvantages for the buyer, the seller, and their creditors. The better you understand the individual motivations of the constituencies, the more likely you are to succeed.