Distressed Investments: Profiting from Economic Upheaval
Private equity firms are raising money for distressed-assets funds like never before.
By Jay Akasie
Global turmoil and economic uncertainty can pay off . . . if
youre a private equity firm raising money for a
distressed-assets fund. Thats because plenty of
businesses are finding it harder than ever to succeed in
todays challenging marketplace, according to Anup Sathy,
a restructuring expert with law firm Kirkland & Ellis.
Sathy joined several investors on a recent Harvard Business
School conference panel to speak about the latest opportunities
in what has become a red-hot niche. Pension funds are looking
for new ways to beef up their portfolios, and theyre
discovering that allocating a slice of their assets to special
situations is a good way to do it, Sathy said.
But the distressed-assets arena isnt without its
challenges. You want to fix everything, like a doctor
treating a sick patient in the hospital, he said.
But the companys executives and directors usually
want you to be out of there as quickly as possible, whether or
not youve addressed all the problems. For
instance, Hostess Brands, the venerable company which produces
the Twinkie, has undergone two restructurings in recent
years. Another panelist, Centerbridge Partners senior
managing director William Rahm, offered a solution:
Weve never replaced a CEO and then lamented we did
it too quickly.