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Have you bitten off too much?

Unanswerable questions, disgruntled suppliers and unruly board members; John Dickinson offers a guide to investing in a failing business

27 August 2015

There is an old expression that says it is difficult to catch a falling knife. The same could be said of investing in a failing company.

Failing businesses don't normally fail overnight. In most cases it is the result of a long drawn out process; there will likely have been at least one round of refinance and a distinct possibility that the business has previously been hawked around for sale.

As a consequence there may be a number of stakeholders involved in the decision making, including: the shareholders, directors, financial institutions, landlords, major creditors and the workforce, to name but a few.


Key considerations

Waiting around is not guaranteed to achieve the best deal; other parties are likely to be interested

The business won’t be cheap because it is failing or distressed

It’s rarely a ...

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