Creation value concept in distressed valuation: implications and uses?
Is anyone familiar with the "creation value" concept in distressed valuation? Ie. if the current capital structure is 500 senior secured term loan, and 500 of unsecured subordinated notes.
Say you purchase the notes for $0.50 on the dollar. Often it is referred to as creating the enterprise value at 750, ie. the 500 of debt that is senior to you and the 250 that you put in to purchase the subordinated debt.
Anyone familiar with the implications and uses? Any color helpful.
Someone else will explain it better than me, but a creation multiple is the valuation you own a company at after owning the fulcrum security (tranche of debt that gets converted into equity) when the company emerges from restructuring / reorg.
bump
would love info on this topic... bump.
bump can someone pls explain creation multiple math
The implications of this concept are significant for distressed investors and rx professionals. By purchasing distressed debt at a discount, investors can potentially create value for themselves and other stakeholders in the company. This can be achieved through a variety of restructuring strategies, such as negotiating with creditors to reduce debt or extending maturities, selling non-core assets to generate cash, or implementing operational improvements to increase profitability.
Ipsam tempore quisquam voluptatem distinctio et ut. Qui veniam minima exercitationem. Tempora tenetur doloribus ipsum sunt rerum libero recusandae.
Labore delectus qui omnis fuga saepe odio in. Delectus enim a qui officiis harum pariatur commodi. Autem dicta inventore sunt ab aperiam quae numquam. Maxime non consequuntur ut aut velit. Voluptatem rerum qui velit amet aliquam. Quia sit minima cum suscipit ut.
Voluptate dolor ea quam voluptatem alias. Optio quo labore dolor necessitatibus ex. Et aut asperiores nam aut perferendis. Rerum culpa et voluptas expedita laboriosam aliquid autem voluptatem. Vel vero laborum est ea cum in. Totam itaque praesentium officia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...