Special Situations

Green Park Partners advises family owned businesses and corporate clients on special situations such as the sale of underperforming or non-core businesses, restructurings or recapitalisations.

Special situations are brought about by different circumstances:

  • Owners want to sell an underperforming business.
  • Capital required to "bridge" business to profitability and/or a liquidity event.
  • Company needs to rebuild reserves to fund future development.
  • Owners want to buy out one or more shareholders.
  • The company wants to reduce headcount or shut down one or more facilities.
  • One or more key executives have departed due to poor health, death, or other reasons.
  • An impending debt maturity must be refinanced at a time when the company's financial condition or market outlook has made capital difficult to secure.
Green Park Partners can advise you as an owner of a Special Situations company: Underperforming Company Sale, Restructuring, Recapitalisation; or as a buyer of a Special Situations company: Acquisition Advisory of Distressed Target.

Special Situations - As a Seller

Underperforming Company Sale

When it's time to explore a sale of an underperforming company or non-core assets, Green Park Partners can provide company owners with the advice and market information to support the decision-making process, as well as a solution that can turn that decision into action:
  • Assess recent financial performance, capital structure, industry conditions and immediate capital requirements
  • Consider all possible strategic alternatives
  • Present the board with one or more recommendations for transaction alternatives, a timeline for each, and an evaluation of their potential impact on the shareholders and other stakeholders
  • Deploy the appropriate resources and professional staff to successfully execute on the selected strategy

Restructuring

Green Park Partners works with our client's directors and management, as well as with the company's other advisors and in some cases creditors, to develop reorganisation plans that are in the best interest of the company, taking into account all of the various stakeholders' goals and objectives.

In some cases, it may be determined that a consensual reorganisation is impossible given the competing interests of shareholders, lenders, and other stakeholders, but in every restructuring engagement, we seek to accomplish the following:

  • Develop a business plan and corresponding financial projection that determines the amount of capital required for the continuing operations, and from that determine the company's capacity to service debt on an ongoing basis.
  • Determine the amount of equity that will be preserved (or contributed) in the newly restructured business based upon a complete understanding of each stakeholder and the determination of potential, future value of the equity based on the plan of reorganisation.
  • Negotiate a "revised" equity structure by mediate among the stakeholders.
  • Ensure that the revised equity structure and any new contributions of capital are supported by a detailed analysis to demonstrate the best value to the reorganised company, with the goal of increasing the likelihood that the business will be viable going forward.

Recapitalisation

Equity

Green Park Partners advises corporate clients and business owners that desire an infusion of new capital to adjust the capitalisation or ownership structure of the company, whether it is to: (a) buy-out an existing shareholder; (b) de-lever the balance sheet; or (c) provide capital for expansion. Through our relationships with private equity firms, banks, and non-traditional lenders, Green Park Partners can access equity and debt specifically targeted for corporate recapitalisations.

Debt Financing

Financing requirements should be dictated by operating plans, but in a distressed situation, the equation is often reversed - which leaves the company at a significant disadvantage. Green Park Partners can work with you to access new sources of debt financing, minimise the overall cost of borrowing, or eliminate onerous loan terms or borrowing rates that no longer match current market levels. Your company should be able to meet its working capital requirements at a reasonable cost while maintaining the maximum amount of financial flexibility.

How Process Differs

Green Park Partners brings unique qualifications and experience that are critical to effectively executing a special situations / distressed sale transaction. Several of the key differences to the sale process in distressed situations are highlighted below:

Speed

Distressed companies with negative cash flow must often be sold quickly before they run out of cash, leaving liquidation as the only other available alternative. For any company it is important to maintain on-going business and to prevent a situation where customers, suppliers and/or employees start abandoning the company. 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.

Execution

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 highly specialised. To manage a distressed company sale process the advisor must:
  • Work with the various parties in interest, including creditors, 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
  • Communicate with the other advisors involved, including bank workout officers and other parties-in-interest.

Special Situations - As a Buyer

Distressed Target

A strategic acquisition is a complex undertaking that requires substantial due diligence and careful planning in order to be successful. This is especially true when acquiring a distressed company.

Speed, efficiency, and experience are key attributes of a successful bidder.

Speed

In the case of any distressed business, speed is often of the essence and the first buyer to show up with a reasonable offer has a distinct advantage.

To act fast - while retaining confidence - a successful buyer needs to deploy more resources to a distressed opportunity. Otherwise, it is impossible to complete the necessary due diligence on a compressed time schedule. If it were your intention to treat distressed situations like a typical acquisition process (complete with exclusivity periods and detailed due diligence), your efforts will be frustrated by more agile buyers who are willing to accept more risk.

Efficiency

Evaluation, approval, legal review, and other steps that would typically be sequential, must happen simultaneously. A distressed sale process (particularly in the bankruptcy context) will typically progress twice as fast - or faster - than a sale process for a "healthy" company.

Experience

Key advisors include an advisor who understands the process of acquiring distressed companies. Distressed assets, equity or debt can be acquired in many different ways, each with advantages and disadvantages for the buyer, the seller, and their creditors. The better you understand the individual motivations of the constituencies, the more likely you are to succeed.

Business Case & Valuation

Distressed company valuation has a different set of requirements than valuation activities for a healthy/financially solvent business. As a special situations advisor, we apply subjective and analytical factors in determining the valuation of various distressed assets including tangible and intangible assets such as intellectual property. Further, our familiarity with the unique challenges of recapitalising or refinancing a distressed business impacts the judgments that are made with respect to growth projections, cost of capital, and discount rates.