Private Equity Interview Question:

Tell us about distressed and special situations?

Submitted by: Murtaza

Distressed or Special Situations is a broad category referring to investments in equity or debt securities of financially stressed companies.

The "distressed" category encompasses two broad sub-strategies including:
☛ "Distressed-to-Control" or "Loan-to-Own" strategies where the investor acquires debt securities in the hopes of emerging from a corporate restructuring in control of the company's equity.
☛ "Special Situations" or "Turnaround" strategies where an investor will provide debt and equity investments, often "rescue financing" to companies undergoing operational or financial challenges.
Submitted by: Murtaza