M&A opportunities resulting from the crisis: Purchase of Business Units in bankruptcy

M&A opportunities resulting from the crisis: Purchase of Business Units in bankruptcy

Abstract:

The purchase of Business Units represents an opportunity to made strategic acquisitions in times of crisis under beneficial conditions. Those deal doesn’t match very well with the classic M&A model and the transactions must be approached from a position of understanding and with a strategy which aligns to the bankruptcy regulations. This includes an analysis of which ordinary agreements must be waived and what advantages implies, as well as an assessment and assumption of the risks which cannot be avoided or negotiated in these processes. Although acquisition can come to fruition during any of the various stages of bankruptcy proceedings, the purchaser will be in a stronger position if the offer goes handin- hand with the bankrupt entity’s voluntary filing. Therefore, we should be alert to potential targets, competitors or suppliers in which we have a strategic interest and which are suffering solvency or liquidity-related difficulties. Approaching such targets at such prompt stage could be decisive in planning and executing a transaction under the best possible conditions, as well as optimising the benefits provided by an acquisition within the framework of a bankruptcy.

Keywords: M&A (Mergers and Acquisitions, business units, bankruptcy, contract assignment, sellers Liability.