Online: Distressed Investing and Advisory

Gain key insights into investing and restructuring in distressed situations

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Next available date: 1 October

After the longest bull market in history, we are now suddenly spiraling downward with the economic impact of the novel coronavirus and the impact of the policies intended to “flatten the curve”. The resulting economic collapse is exposing a significant number of companies to financial distress. In this online program, spread over four half-day blocks, we will take a ‘value investing’ approach to analyzing such special situations to assess the degree of financial distress in individual businesses, the extent of the investment opportunity, and what turnaround steps might be required to ensure an acceptable return on investment for the activist, value investor in a distressed situation.

Identify opportunities is distressed markets
In this program, you will be exposed to a conceptually challenging curriculum, exploring both the theoretical basis and practical application of the major elements of investing in distressed situations. You will gain crucial insights into the fundamentals of value investing, including being able to estimate the fundamental, intrinsic, value of the underlying business using discounted cash flow valuation. Once the business value is assessed, the debt capacity must be examined, which will build upon the company cash flow analysis to estimate whether, when and on which debt securities the business is expected to default. 

We will practice using the content of the typical ‘cap table’ to provide a ‘snapshot’ of the financial situation and demonstrate how to perform a ‘waterfall’ analysis to assess where the value will ‘fall’ in the capital structure. This will help you to identify the most or least interesting investment options based upon the difference between current market price and the intrinsic value of the security.

Develop an investment thesis
Once we have identified the potential investment opportunity we will develop the investment thesis for a given security. This will require an assessment of the likely restructuring and turnaround proposals, such as amendments to extend maturity, debt for equity exchange offers, or seeking protection in the legal insolvency/restructuring regime. We will discuss the legal environment (including a base understanding of the US Chapter 11 and similar regimes in other countries), as well as examine the game theoretic behaviors which will impact both the restructuring of the business and the deal-making across the capital structure. 

Last but not least, as negotiation is an essential skill of the distressed investor, we will also highlight the important ‘soft skills’ associated with earning an exceptional return on investment in special situations.

Program length
4 days ( 1, 2, 8 and 9 October 2020)

Day 1 14:30 – 18:30
Day 2 14:30 – 18:30
Day 3 14:30 – 18:30
Day 4 14:30 – 18:30

How you will benefit

  • Explore the theory and practical application of investing in distressed situations
  • Develop a thorough understanding of the fundamentals of value investing
  • Estimate the fundamental value of a business using discounted cash flow valuation
  • Examine debt capacity and its implications for investors
  • Learn to use the content of the typical capitalization table
  • Gain the skills to perform a ‘waterfall’ analysis
  • Identify potential investment opportunities
  • Practice with building an investment thesis
  • Assess restructuring and turnaround proposals
  • Discuss the legal environment in distressed situations
  • Explore the game theory behind investing and restructuring in distressed situations
  • Improve your negotiation skills to earn an exceptional return on investment in special situations

During this program we will work through a series of conceptual and numeric examples, conducted as group work and discussed in plenary session, enabling you to deepen, and exhibit, your understanding of the fundamental concepts. These cases will also enable you to practice the steps in investment analysis process being taught in this program. The process and the conceptual basis for this approach to value investing in distressed situations will be explained and elaborated on Day 1, and the refinement and application of the process will be further illustrated, and practiced in the case studies and class discussions on the remaining days. 

Joins us on 1, 2, 8 and 9 October 2020.

Day 1 | 14:30 – 18:30 (CEST)

  • Program introduction
  • The game theory behind investing and restructuring in distressed situations
  • The conceptual foundations of value investing in a distressed environment 
  • Why do investors think they can make abnormal returns in distressed situations?  – The approach and mindset of Oaktree’s Howard Marks provides the framework 
  • Causes of distress and barriers to resolution
  • Bayfield Generators case study

Day 2 | 14:30 – 18:30 (CEST)

  • Distressed investment historical performance
  • Understanding the legal environment and its implications for restructuring alternatives
  • Estimating the value available for distribution
  • Estimating where in the capital structure the cash flow and value will cascade
  • Identifying the fulcrum security
  • Bayfield Generators case study (continued)

Day 3 | 14:30 – 18:30 (CEST)

  • Identifying the pathways for restructuring
  • Assessing the need for, and potential for recovery from a restructuring
  • Considering business turnaround strategies and their impact on value available for distribution
  • Assessing an exchange offer
  • Pinewood Mobile Homes case study
  • Crisis at the Mill case study
  • Negotiation of distressed situation: preparation

Day 4 | 14:30 – 18:30 (CEST)

  • Negotiating an investment and rights offering
  • The ‘human side’ of distressed investing and advisory
  • Negotiation debrief and program wrap-up

This program is relevant for:

  • Anyone interested in value investing in distressed situations
  • Anyone providing advisory services to firms in distressed situations
  • Professionals working in hedge funds, private equity, or direct investment
  • Those working in advisory roles serving companies facing restructuring or who are engaged by investors who are considering an investment in distressed companies
  • Those who entrust their money to distressed investors who wish to be familiar with the process employed and able to assess alternative investors and their strategies and performance

Faculty

Kevin Kaiser

Kevin Kaiser is Senior Director of the Alternative Investments Initiative and Adjunct Full Professor of Finance at the Wharton School of the University of Pennsylvania. He was Professor of Management Practice and on the finance faculty at INSEAD from 1992 until 2017. Kevin’s research has focused on private equity, corporate restructuring and financial distress, more recently oriented…

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  • 4 days
  • € 1995
  • Corporate Finance, Investment Management
  • English
  • NEW

Available dates

Need help?

Find your program here or contact us directly for personal advice:
Call us at +31 20 520 0160 or email us at [email protected].


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