Private Equity Question:
Tell us about distressed and special situations?
Answer:
Distressed or Special Situations is a broad category referring to investments in equity or debt securities of financially stressed companies.
The "distressed" category encompasses two broad sub-strategies including:
☛ "Distressed-to-Control" or "Loan-to-Own" strategies where the investor acquires debt securities in the hopes of emerging from a corporate restructuring in control of the company's equity.
☛ "Special Situations" or "Turnaround" strategies where an investor will provide debt and equity investments, often "rescue financing" to companies undergoing operational or financial challenges.
The "distressed" category encompasses two broad sub-strategies including:
☛ "Distressed-to-Control" or "Loan-to-Own" strategies where the investor acquires debt securities in the hopes of emerging from a corporate restructuring in control of the company's equity.
☛ "Special Situations" or "Turnaround" strategies where an investor will provide debt and equity investments, often "rescue financing" to companies undergoing operational or financial challenges.
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