hello, i’m curious… whats the best way to go about bankruptcy valuation for a company going into liquidation? thanks!
For liquidations, they typically bring in an army of bean-counters do value everything. Someone correct me if I am wrong (I don’t deal with bankruptcies).
Bring in experts that know how to value those specific assets. Then apply some kind of liquidation discount to the estiamted market price, since these bankrupt companies will probably have a fire sale when it comes to disposition of assets.
Well you hire an IB who puts together a valuation model based on management’s restructuring plan, and then you compare that to the liquidation value to show that debt holders should approve the plan…high level idea.
how about the people who are not in IB, such as those accounting advisory firms? what kind of models would they use? would it be the same as what ibanks use?? thanks!.. im totally clueless, but curious…
Here’s a great idea that will actually teach you something. Pick up a few books on the topic. Such as: Marty Whitman: Distressed Investing Stephen Moyer: Distressed Debt Analysis (I haven’t read it but it’s pretty popular - does anyone have any constructive feedback on the book?) Read some stuff from Ed Altman (NYU) Individual investors don’t generally have the assets to participate in the distressed debt market - so if this is a learning experience them go through with it. If you think you want to invest in the market, busted equities are your only option.
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ValueAddict Wrote: ------------------------------------------------------- > Such as: > Stephen Moyer: Distressed Debt Analysis (I > haven’t read it but it’s pretty popular - does > anyone have any constructive feedback on the > book?) I just read this book a week ago. It’s phenomenal. I haven’t read any other books on the subject, but I wanted something to get me up to speed fast on distressed analysis since I will be helping with a lot of this type of analysis at work in the near future and was feeling lost since I’ve only worked with equities in the past. The book walks through the distressed process “end to end” and explains the process in significant detail. The author’s style is clear and to the point, and he explains any unintuitive aspects of the process well. I started work on a distressed project at work this week and definitely felt like I understood what was going on. 5 stars. ValueAddict, besides the two books you referenced, do you know of any distressed debt resources, either in print or online? I personally find this to be the most interesting type of investing and want to learn more about it.
http://www.distressed-debt-investing.com/ this is a good site for current situations, peppered with some how to’s
bromion Wrote: ------------------------------------------------------- > ValueAddict, besides the two books you referenced, > do you know of any distressed debt resources, > either in print or online? I personally find this > to be the most interesting type of investing and > want to learn more about it. Bromion: I do not. I guess you can say my interest in distressed debt has been limited so far. More of an equity guy. It’s definitely very interesting, but complex - and the space is getting overcrowded (especially now with everyone and their mother raising capital for a “distressed opportunity fund”). If I hear that one more time I might puke. It’s opportunistic capital at best. Distressed debt was a less picked over space in the 90’s, but I am sure with a lot of HF closures the space may become attractive again. The structure of the market has also changed with the rise in senior secured bank loans. Bsivia, isn’t there a blog you run that is dedicated to distressed investing?
bsivia Wrote: ------------------------------------------------------- > http://www.distressed-debt-investing.com/ > > this is a good site for current situations, > peppered with some how to’s Thanks, looks interesting, I will read through it.
ValueAddict, No I run just a plain vanilla value investing blog (http://safe-and-cheap.blogspot.com/) This guy, his names Hunter, actually works for a distressed debt fund and has/is providing a lot of very interesting information for anyone who wants to learn!
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