Distressed Flashcards
Distressed companies
businesses that are experiencing financial difficulties, often facing a high level of financial distress, insolvency, or a risk of bankruptcy.
represent an investment opportunity for investors who specialize in distressed debt or distressed asset strategies.
seek to profit from the potential turnaround or recovery of troubled companies.
does not typically involve a cash flow to the company
Distressed investing focuses on
purchasing the debt of troubled companies that may have defaulted or are on the brink of defaulting.
Importance of Distressed companies
Potential High Returns (If recovers and turns its financial situation around resulting in attractive returns for investors.)
Diversification (their returns are not highly correlated with traditional asset classes)
Specialized Expertise (possess expertise in assessing the financial health and identifying the potential for recovery.)
Impactful Turnaround (opportunity to actively influence the company’s restructuring or turnaround strategy)
