Transactions out of insolvency::
Look especially closely!

6 June 2021

A company purchase out of insolvency holds many peculiarities and a supposed bargain can cost the buyer dearly in the end. The situation of the object of purchase leads to considerations and actions, especially among the people who are directly affected, that are not immediately apparent to a potential buyer. Do the employees still believe in the company and a successful new start? Will customers stay on board? Can suppliers who may have just suffered bad debts due to a debt cut be relied upon in the future?

No matter which form of transaction is chosen (share deal vs. asset deal), the buyer does not receive any of the usual guarantees. Therefore, due diligence is even more important than it already is.

And crucially, think ahead and get people on board. Cohesion at all levels inside and outside the company is required here, and this is one of the most important tasks for an M&A advisor. He or she must not only understand the particular system and challenge, but also clarify the essential questions ahead of time.