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The Handbook of Mergers and Acquisitions$
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David Faulkner, Satu Teerikangas, and Richard J. Joseph

Print publication date: 2012

Print ISBN-13: 9780199601462

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780199601462.001.0001

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Acquiring Distressed and Bankrupt Concerns

Acquiring Distressed and Bankrupt Concerns

Chapter:
(p.272) Chapter 10 Acquiring Distressed and Bankrupt Concerns
Source:
The Handbook of Mergers and Acquisitions
Author(s):

Scott Moeller

Maria Carapeto

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199601462.003.0010

This chapter discusses acquisitions of distressed and bankrupt concerns. The chapter 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 chapter then proceeds to compare both the 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 chapter ends with a timely discussion of the financial services industry that has recently been in distress and as such provides important insights into distressed merger activity.

Keywords:   distressed acquisitions, auctions, bankruptcy reorganization, fire sales, economic cycles, post-acquisition divestitures

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