The disposal of distressed assets is all about an understanding of the inherent value and structure of the assets so as to keep the value high. Hermes excels in valuing Assets especially distressed assets. So when a person or business needs immediate cash and wants to sell the asset at less than its value, the situation becomes a distressed asset.
Distressed assets fall into three basic categories: personal property, equity ownership in a business (which is a form of personal property), and real property. The art form is the ability to substantiate the value of the assets and an understanding of what market is. Companies in distress utilize Hermes to help it undertake a sales process of assets to alleviate cash flow or debt repayment issues. Often this course of action is the last resort after all other lines of credit have been exhausted or creditors have stopped providing extended terms of trade.
Hermes has taken companies in pre-bankruptcy, bankruptcy and other forms of distress where we have underwritten the financials and provided a clear analysis of the financials and the valuation of the company. In most cases it is our financial analysis, value of the assets and cash flows that we have been able to obtain greater valuation, capital and terms that helped our client turnaround its business.
Some of the most important issues to consider when selling distressed assets is:
Companies under financial pressures may consider one of their options as selling their business. At the same time, buyers may find opportunities in acquiring a distressed companies at a discount. The sale of a distressed company raises a number of competing issues for buyers and sellers. A brief mention of some of the issues to consider in buying or selling a distressed business are included below.
- Valuation: Obviously, the seller will want the highest price it can get, while the buyer will want to negotiate for the lowest price it can obtain.
- Asset Sale vs. Stock Sale: The question is the structure of the sale and purchase
- Purchase Agreement Issues: The sale of a distressed company will involve unique questions for the Purchase Agreement.
- Employment and Non-Competition Agreements. The owners of a business may want to sell in order to alleviate themselves of the financial burden of the business, but they might want to continue being employed.
- Bankruptcy Purchases: Buying assets through a bankruptcy proceeding offers added benefits to the buyer.
What is most important in the sale or purchase of any asset especially a distressed company or assets is the valuation of the assets and the ability to substantiate its value. This is very important to support and defend the price. This allows us to identify the problems and potentially how to fix them. What we also do is to use optimization in the organization and structure of the deal which allows us to make recommendations and solutions. This makes the transaction much more valuable.
For any questions contact us at info@Hermes.Global