0 Part Course  | 
Book places now

Valuing Distressed Corporate Debt

Learn about the current distressed debt market structure and drivers

Close up of the structural supports of a glass building

A one-day course

Part One

Session One

Dynamics of the Problem

  • Classes of distressed debt
    • Leveraged loans
    • Syndication debt
    • High yield bonds
    • NPLs
    • Post debt insolvency
  • Understanding the difference between price and value
  • Is it a liquidity issue or a solvency problem?
  • Operational or financial distress?
    • What were the causes of company underperformance?
  • Possible restructuring solutions
    • Business & company reorganisation
    • Financial restructuring and insolvency
    • In-court restructuring or out-of-court restructuring and the impact on valuation
    • What can we learn from previous solutions?
  • What cash flow is required for success?
  • Assessing minimum cashflow requirements for turnaround
  • Going concern value versus liquidation value
  • Case study example: evaluation of the restructuring options and debt value for a recent distressed investing company

Session Two

Cashflow Issues

  • Forecasting adjusted corporate cashflows
    • Transition period (from distress back to sound health)
    • Sustainable period after (in sound health)
  • Adjusting current EBITDA levels to reflect turnaround solution
    • Assessing margins
    • Potential litigation costs
    • Difficulty retaining key staff
  • Working capital forecasts
    • Stretched working capital needs in distress
  • Matching capital expenditures to growth forecasts
  • Tax shields and carry forward losses
  • Forecast time periods
    • Estimating the competitive advantage period
  • Terminal value calculations and adjusting for potential failure
  • Sensitising the cashflows for distress
    • Using bond data to estimate distress probability
  • Discount rate problems
    • Factors to consider when determining the cost of equity and cost of debt for the valuation of distressed companies 

Overnight Exercise: producing a cashflow forecast for a sample distressed company

Part Two

Session One

Which valuation methods to use

  • Valuation methodologies
    • Break-up or liquidation values
    • Replacement value
    • Discounted cashflow valuation for distressed assets funds
  • Going concerned premium plus liquidation value
    • Relative multiples: EBITDA, revenue-based, others
    • Disaggregating the multiple
  • Identifying the key drivers of risk, growth, and reinvestment
    • Option valuation methodology
  • What are we trying to value?
    • Going concern versus liquidation
    • Collateral differences
    • Carve-outs/spin-offs
    • Capital structure and subordination impact
  • Present value of cashflow for each subordinate debt piece
    • Standstill agreements and waterfall provisions 

Session Two

  • Discounted cash flow valuation of the company debt: models, assumptions, and outputs
  • Understanding the key DCF cash flow drivers of the business and its funding needs
  • Macro and sector drivers: industry considerations and critical success factors
  • Company-specific drivers: changes required to the operating model to address operational problems and establish a sustainable EBITDA
  • Identifying the factors which have the greatest impact on the debt value
  • Overall operational, investment and other financial drivers required to sustain the business
  • Comparative multiple approaches using appropriate peers and multiples for distressed companies
  • Putting it all together into a completely distressed debt valuation
  • Case study example: valuation of the debt of a recently distressed company using DCF and comparative methods

Our trainer is the Managing Director of an international advisory company specialising in advisory and development services to the corporate, banking and finance industry, which he has owned for the past 17 years. He is an experienced corporate finance professional with practical experience and extensive knowledge of corporate financial restructuring and structured finance in global financial markets.

He is a Visiting Fellow in the M&A department and Programme Director at Executive Development, Sir John Cass Business School, London, a member of the Visiting Faculty at Fuqua Business School and has previously worked as an advisor to the Overseas Development Administration in the UK, as well as EU PHARE and TACIS programmes throughout Europe and Russia.

The trainer’s main areas of expertise are corporate finance, M&A, corporate analysis and structured finance, asset securitization, risk management, valuation, corporate credit processes, project finance and treasury management. He currently works with many global corporate and banking clients in these areas and he also acts as an Expert Witness for London law firms in respect of his areas of expertise.

The list of global clients is extensive and covers both European, Middle East, African and Asian markets. In the corporate market, he works extensively with large corporate clients, private equity firms, and private investors as well as public sector companies such as the NHS and major law firms. He provides advisory and development services to these organisations, either through the relevant departments or directly to the senior line management.

He is also a well-known figure within the various training and development companies within Europe and regularly gives seminars throughout the world on his specialist topic areas and is a recognized expert in this area by many organisations.

He was previously the Managing Director of a subsidiary of Union Plc, a London merchant bank having previously worked with several high-profile global investment banks. He left Union Plc in 1996 to form his own international advisory Company.

The list of financial institutions and corporates with whom he has worked over recent years is extensive and includes: Allied Irish Bank, Alpha Bank, Bank of America Merrill Lynch, Bank of China, Barclays, Bayern LB, BT plc, Citibank, China Construction Bank, Credit Agricole, Credit Suisse, Danone, DECC, Deloitte, Dexia, Emirates Bank, E&Y, Euler Hermes, First Gulf Bank, FSA London, Garanti Bank, HBOS, Hohhot Bank Mongolia, HSBC, HVB, Iccrea Banca, Intesa SanPaolo, Central Bank of Ireland, KPMG, L’Oreal, Malta FSA, Mongolian Stock Exchange, Morgan Stanley, Mubabdala, NHS and many others.

  • Understand the current distressed debt market structure and drivers
  • Identify key features of transactions
  • Review documentation requirements
  • Due diligence process
  • Valuation techniques for distressed debt
  • Developing the model for distressed debt valuation methods

  • Delivered online to maximise the use of time
  • Flexible in terms of delivery
  • Understanding valuation from a practitioner’s viewpoint
  • Practical examples of real transactions
  • Combining theory and practice
  • A comprehensive review of the distressed debt process

Our training will deliver the following objectives:

  • Appreciate the difference between price and value
  • Identification of corporate distress issues and relevance to valuation
  • In-depth analysis of cash flow patterns
  • Review of main valuation methodologies
  • Application of methodologies to distressed corporate debt

  • The teacher is just amazing, and thanks to him this training was useful and relevant (first time for me in a remote mode).
REQUEST CALL BACK

Have this course presented In-House

  • On a date, time and in a location of your choice
  • Topics expanded or deleted to your bespoke requirements
CLICK HERE TO REQUEST A FEE QUOTE

Have this course pre-recorded

  • Full course recording edited exclusively for your company
  • Files converted to enable housing on your LMS
CLICK HERE TO REQUEST A FEE QUOTE
Trusted By:

Popular Courses

Clients that have booked this course have also attended the following courses:

We use cookies

In order to show you courses tailored to your profession we use cookies.

To enjoy all the features of this website please accept.