Distressed M&A
Corporate acquisitions in crisis or insolvency contexts. Characterised by compressed timelines, high information asymmetry and alternative price discovery.
Distressed M&A refers to transactions with targets in economic distress — from mild difficulties to opened insolvency proceedings. In DACH, distressed deals are usually asset deals out of ongoing insolvency; less often share deals via insolvency plans.
Four characteristics: (1) time pressure — deals typically must close in 8–20 weeks instead of 6–12 months; (2) reduced due diligence — the data room is incomplete, reliability of numbers is lower; (3) alternative price discovery — normal M&A multiples don't apply, the focus is on realisation values; (4) different counterparts — insolvency administrators or supervisors instead of shareholders.
Buyers in the distressed segment come from four typical groups: strategic consolidators, specialised private equity, family offices with operational expertise, and search-fund/ETA investors who source targets from insolvency.
Related terms
- → § 9 InsO (insolvency announcements)— German statutory rule on public announcements in insolvency proceedings. Requires opening …
- → Insolvency administrator— Court-appointed representative of the insolvency estate. Takes disposal rights, monetises …
- → Eigenverwaltung (debtor in possession)— Insolvency proceeding under § 270 InsO in which management stays in office and continues t…
- → Asset deal— Acquisition of individual assets (brand, inventory, contracts, staff) instead of company s…
- → Share deal— Acquisition of company shares — including all liabilities. In insolvency the exception.…