It is no secret that with the combination of a strong economy, many baby-boomers approaching retirement age and the accumulation of cash by buyers, M&A activity has been in a frenzy. There will come a time, however, when the economy turns, whether that is in 2019, 2020 or later. Does that mean that M&A activity will come to a standstill and that opportunities for buyers will cease to exist? The answer is no. A downturn in the economy usually results in an uptick in business bankruptcy filings. A business bankruptcy filing can either be a reorganization or a liquidation. Most reorganization attempts fail. However, the unfortunate demise of a bankrupt company can present opportunities for buyers. The bankruptcy laws include a procedure for a bankrupt company to sell its assets free and clear of all liabilities. The facts that there are usually a limited number of potential buyers in a bankruptcy and, correspondingly, the sales price for assets is not always at fair market value, present potential for opportunistic buyers. So, although the economy will eventually encounter a downturn, buyers should keep their eyes and ears open for openings to purchase a company out of bankruptcy.
ABOUT GLENN D. SOLOMON
email@example.com | 443-738-1522
Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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