Valuing Distressed And Declining Companies
Source: Stern School of Business
The most difficult companies to value are at either end of the life cycle, with young growth companies and declining companies posing the biggest challenges. In this paper, the authors focus on companies that are at the tail end of their life cycles and examine how best to value companies with flat and declining revenues and stagnant or dropping profit margins. Since many of these companies also have significant debt burdens, they also evaluate ways to incorporate the possibility of distress and default into value.