Regardless of circumstances, whether it be the owner's health failure, the lasting impacts of COVID-19, or the inevitable end of an economic boom cycle, periods will arise when certain businesses become unable to continue profitably. In these situations, if the stakeholders are able to react timely, there is often value significantly in excess of liquidation value that can be preserved and realized. Employee and customer relationships can be preserved under new ownership and the business and the owner's legacy can continue.
In distressed situations, creditors often initiate the sale process, as lenders seek to liquidate their claims in a struggling company that represents an increased risk. Distressed companies with negative cash flow must often be sold quickly before they run out of cash, leaving liquidation as the only available alternative. For service companies where the company’s receivables are their primary asset, a transaction must be accomplished before customers become aware of the distressed situation and potentially stop payments.
Calder is uniquely positioned to handle small and lower middle-market-sized companies with revenues of $3M+.
Accordingly, a distressed M&A Advisor must have the resources and experience to move quickly and be able to assess the trade-off between time and value. Although the process of contacting buyers and facilitating due diligence is similar to that of a healthy company M&A process, the expertise required to facilitate a distressed deal is specialized. To manage a distressed company sale process the Advisor must:
- Work with the various parties in interest, including secured creditors, landlords, shareholders, directors, and management;
- Work in a compressed time frame to avoid an extended and expensive bankruptcy process;
- Position and articulate the value drivers that make the company’s assets attractive to a buyer; and
- Effectively communicate with the other professionals involved, including crisis managers, bankruptcy attorneys, bank workout officers, bondholders, and other parties in interest.
Calder Capital assists owners of distressed/struggling businesses to find a suitable buyer in a compressed period of time, thus preserving as much value and continuity of present operations as possible. Calder has the resources to make it happen, chiefly:
- Calder has closed multiple transactions in less than 3 months.
- Assuming prompt turnaround time on information requests, Calder can be in front of prospective buyers within 14 days of engagement.
- Calder has relationships with asset-based lenders that offer financing for distressed businesses.
- Calder maintains a growing database of 150,000+ investors, owners, and professional advisors.
- Calder's website appears high in Google for "distressed" and "turnaround" business for sale searches, driving a continuous stream of buyers specifically searching for distressed sales.
- While most distressed sale M&A firms focus on companies with significant revenues ($30MM+), Calder is uniquely positioned to handle small and lower middle-market-sized companies with revenues of $3M+.
The biggest mistake that owners make is waiting too long. Liquidation is almost universally the worst option, both economically and emotionally.
Contact Calder today to get the process started immediately!