The ongoing COVID-19 situation has affected a large number of businesses across a wide variety of sectors. It is, however, not all doom and gloom, for, as with previous crises, opportunities emerge for astute investors and buyers seeking acquisitions or investments at attractive valuations. Strong-willed business owners may now be more easily persuaded to transact with the promise of a cash injection lifeline, and cash-rich, opportunistic buyers will undoubtedly be interested in businesses with strong fundamentals that are positioned to ride out the storm and emerge stronger.
But buyers and investors need to be alert – purchasing or investing in distressed businesses gives rise to complexities and considerations that are not typically present in ‘good book’ deals. In this Part 1 of a three-article series on M&A transactions involving distressed sellers, businesses or assets, we briefly examine key, preliminary issues to be considered by prospective buyers and investors.