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Acquiring Distressed and Bankrupt Concerns

Faulkner, D., Teerikangas, S. & Joseph, R. (eds), The Handbook of Mergers and Acquisitions (Oxford University Press, 2012)

24 Pages Posted: 13 Aug 2012  

Scott Moeller

City, University of London - Cass Business School - Faculty of Finance

Maria Carapeto

City University London - Cass Business School - Faculty of Finance

Date Written: August 1, 2012

Abstract

This paper discusses acquisitions of distressed and bankrupt concerns. It starts with a description of the different types of targets (healthy, distressed, bankrupt) and provides insightful comparisons of deal and firm characteristics using the above classification, while recognizing the importance of economic cycles and how they may affect distressed and bankrupt acquisition levels. The paper then proceeds to compare both short-run and long-run performance of the companies involved in deals with the different types of targets and discusses special processes used such as bankruptcy reorganization and auctions, their relation to ‘fire sale’ discounts, and bid structure. The issue of post-acquisition divestitures is also analyzed. The paper ends with a timely discussion of the financial services industry that has recently been in distress and as such provides important insights of distressed merger activity.

Keywords: distressed acquisitions, auctions, bankruptcy reorganization, fire-sales, merger performance, economic cycle, post-acquisition divestitures

JEL Classification: G33, G34

Suggested Citation

Moeller, Scott and Carapeto, Maria, Acquiring Distressed and Bankrupt Concerns (August 1, 2012). Faulkner, D., Teerikangas, S. & Joseph, R. (eds), The Handbook of Mergers and Acquisitions (Oxford University Press, 2012). Available at SSRN: https://ssrn.com/abstract=2128535

Scott Moeller (Contact Author)

City, University of London - Cass Business School - Faculty of Finance ( email )

106 Bunhill Row
London, EC1Y 8TZ
Great Britain
+44 20 7040 8706 (Phone)
+44 20 7040 5168 (Fax)

HOME PAGE: http://www.cass.city.ac.uk/experts/S.Moeller

Maria Carapeto

City University London - Cass Business School - Faculty of Finance ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 20 7040 8773 (Phone)
+44 20 7040 8881 (Fax)

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