Acquiring Distressed and Bankrupt Concerns

Scott Moeller and Maria Carapeto

in The Handbook of Mergers and Acquisitions

Published in print June 2012 | ISBN: 9780199601462
Published online September 2012 | e-ISBN: 9780191743320 | DOI:
Acquiring Distressed and Bankrupt Concerns

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This chapter discusses acquisitions of distressed and bankrupt concerns. The chapter starts with a description of the different types of targets (healthy, distressed, bankrupt) and provides insightful comparisons of deal and firm characteristics using the above classification, while recognizing the importance of economic cycles and how they may affect distressed and bankrupt acquisition levels. The chapter then proceeds to compare both the short-run and long-run performance of the companies involved in deals with the different types of targets and discusses special processes used, such as bankruptcy reorganization and auctions, their relation to “fire sale” discounts, and bid structure. The issue of post-acquisition divestitures is also analyzed. The chapter ends with a timely discussion of the financial services industry that has recently been in distress and as such provides important insights into distressed merger activity.

Keywords: distressed acquisitions; auctions; bankruptcy reorganization; fire sales; economic cycles; post-acquisition divestitures

Chapter.  5891 words.  Illustrated.

Subjects: Financial Institutions and Services

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