Private Equity – Create Seller Incentives in Distressed Acquisitions – 2

When the subordinate debt schedule can be eliminated from the underlying value of business operations, transactions are streamlined because incentives are created for all parties.

Leveraging the strategic Article 9 short sale liquidates business assets into a new purchasing entity, preserving the continuity and full ongoing concern value of a target acquisition.

Sellers are incentivized with a path to a successful exit, where one did not previously exist. This is because the purchaser can enter at the attractive cost of liquidated asset valuation and thus strategically allocate value back to the seller in order to reconcile personal guarantees. The first position creditor recovers their appraised value on the collateral quickly, without the need for auction.

For the PEG professional, deals can be assessed without regard to the debt schedule, because the strategic Article 9 reorganization eliminates the need for complex short sales, subordinate creditor consents, or Chapter 11 / 363 sales.

Call us: 1-800-594-RISE (7473)
Email us:
Like us on Facebook:
Follow us on LinkedIn:
Visit our Website:

Please SUBSCRIBE to our YouTube channel for unique perspectives on all things business!


– An alliance with Second Wind Consultants Will allow you deploy the Article Nine Strategic short sale process, Which will allow you to enter at a price That is commensurate with the Forced liquidation value on the assets. Which will minimize your entry cost When compared to any other acquisitional Strategy you’re considering. It also create an opportunity therefore To create seller-based incentives Which will allow you to receive more LOIs Back from your target acquisitions And therefore increase your
deal flow and your ROI. At Second Wind Consultants our experience In dealing with distressed business owners Lends us a vision into why a lot Of these transactions are not successful. It is that regardless
of how many companies Are competing for distressed acquisition, Many of them are not providing
any seller incentives. They’re looking for a
way to chop up the debt Or bring it through a 363 sale Or handle part of the
solution but not all of it. Business owners personally guarantee A lot of their outstanding obligations And because of that
they don’t see a way out When someone comes in and solves
a portion of their problem. So coming in and purchasing just the debt Or reorganizing part of the business Only solves a portion of their problem And leaves the seller about
to file a bankruptcy anyway. And if they’re going to file a bankruptcy They’re going to do it now,

They don’t need to sell you their business To then file a bankruptcy. In order to be successful in acquiring Businesses in a distressed space, You need to find a way to create Some seller based incentives. At Second Wind Consultants, we deploy The Article Nine short sale process Which lowers the entry price
for any PE professional Or strategic purchaser and creates a delta In which they can reassign some Of that acquisitional value to the seller To incentivize them either in a earn out Or performance-based consulting agreement That allows them a successful exit. May not make them wealthy individuals But they now have the means in which To avoid a bankruptcy filing and therefore Have an incentive to sign your LOI And do the deal to begin with. So if you’re competing amongst Other PE groups in this space And not seeing your LOIs come back It’s because you haven’t given the seller A reason to sign them.

You May Also Like