The opportunity in accelerated mergers and acquisitions

Grant Thornton

Do you see a future in a distressed business? Sarah O’Toole takes a look at what buyers need to think about when considering accelerated mergers and acquisitions (AMA) opportunities.

While the last two years have seen reduced levels of formal insolvency appointments, there’s no doubt that the challenges experienced during the period have left many businesses in precarious financial positions.

Following the lifting of Covid-19 restrictions and the withdrawal of government support measures across the UK, it’s likely that stakeholders looking to dispose of underperforming businesses will consider sales of shares, businesses, and assets through an accelerated disposal.

What is a distressed acquisition?

For the majority of companies facing insolvency, cashflow concerns will be the key driver. As a consequence, the immediate injection of new capital through the sale of existing businesses, or profitable elements of them, will frequently be the most attractive rescue option.

While restructuring by way of equity purchase or debt refinancing is appropriate in some instances, these types of transactions frequently require timeframes that many distressed companies simply cannot afford.

Most commonly, the purchaser will acquire the business and assets of the target company via a process referred to as a pre-pack administration. The purchaser takes on the salvageable part of the business while existing liabilities will be left with the insolvent estate to be handled by the administrator.


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