Trends And Opportunities In Distressed M&A Investing

With relatively inexpensive capital available to investors through low interest rates and excess “dry powder” in the marketplace and an M&A market that has become increasingly competitive, potential investors and deal professionals are willing — and some are in fact actively looking — to engage in transactions involving underperforming and insolvent assets in an effort to maximize returns in this difficult market.

The opportunities to engage in those types of transactions are increasing as well, with S&P recently reporting that the U.S. distress ratio had widened to 8.5% as of Oct. 15, up from 7.6% on Sept. 16.

As a result, it is expected that M&A activity involving distressed or insolvent companies may increase in the coming year (especially in certain industries), and as 2019 comes to a close, it may be helpful to consider some of the past year’s distressed M&A developments and trends, including how the market may evolve in the coming year.