I am looking for a distressed debt model. Any help appreciated to locate a model that is available on line. If not a on line link, I would be happy to get any written material or book that can outline a working distressed debt model. Thanks for your kind help.
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Not a model but "Distressed Debt Analysis" by Stephen Moyer is a superb book. I work in distressed and can vouch for the relevance and applicability of the text. As far as a "model", i can't speak for everyone but distressed situations are very dynamic and broad so I don' think there is really a standard "template" like you would use for other transactions.
I already read the "Distressed Debt Analysis" by Stephen Moyer. Thanks
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I think he is a bit confused. I really don't think you need a "model" to analyze distressed debt. Projections are going to be hard when you have factors that may or may not be temporary leading to what could be negative EBITDA. I suppose you could use residual income models but i don't really know if those are ever used outside of textbooks. Honestly I think your best served by Coming up with a defensable valuation using market multiples, deducting any senior debt from that number, and then dividing the leftover amount by the face value of whatever issue your looking at. This will give you a ballpark "recovery rate". Then sensitize EBITDA and multiples in a table, and if you think your asset coverage is decent in a downside case, buy it.
distressed models (Originally Posted: 08/21/2007)
Would anyone be kind enough to give me an overview of how a distressed model works? I am pretty sure that I am off on the nomenclature; but basically a model that provide a valuation on a company that is distressed. I know that these deals are complex and many of the finer points are negotiated by stakeholders. A general overview of the valuation process and model inputs/outputs/drivers would be great, though.
regular way companies, except that you will look to FCF and FCF yields a little more, asset valuations (if the company sells part of itself or completely liquidates, receivable and inventory firesale value) and other more unique valuation methods. But you are correct, the finer points of each situation matter a lot (pension liabilities, off-balance sheet liabilities, etc that completely drive valuation). In a lot of ways though, valuation ends up being very similar when you reorg and come out of chp. 11, you standard banking football field (dcf, multiples, precedent deals, publlic comps with varying discounts) usually carry the day (check out old valation filings-Delta, WorldCom, etc)
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