IN DANGER OF BUYING HIGH: DISTRESSED ASSETS VALUED PROPERLY

SITUATION

Sometimes, even private equity firms get valuation wrong. A private equity firm sought to acquire a distressed asset being auctioned under a Chapter 11, Section 363 bankruptcy process. The firm’s initial offer was rejected, and they’d lost the right to be considered the stalking-horse bidder along with all the advantages associated with that position. They needed help in fine-tuning the value of the asset and turned to Capto.

THE SYNAPTIC SHIFT

Capto used the agility of the SYNAPTIC method to quickly identify key areas of opportunity and outline primary risk factors. As a result, the firm was able to convince its investment board to increase available funding by $20 million. Our staff was part of the team at the Section 363 sale, facilitating real-time decision making throughout the bidding.

RESULT

• Ultimately, our client did not win the auction, but they felt Capto contributed significantly to the team by enabling it to make its bid at the appropriate value
• Capto lowered financial risk and exposure, preventing the firm from overpaying for the asset