How to Maximize Distressed Asset Value

It is clear that things are different now. A year after the collapse of some of the most revered financial institutions, it is now time to explore how best to maximize the value of what was left in the wake of that fall: distressed assets. The failure of Bear Sterns and Lehman Brothers and the federal takeover of Freddie Mac and Fannie Mae resulted in a widespread market meltdown and a systemic economic crisis. From both the buyer and seller’s perspective, certain factors are necessary to restore liquidity to the credit markets. Recently, there has been a lot of emphasis placed on the value of assets in conventional loans based solely on cash flow and the credit score of the borrower. The insecurity regarding the overall health of the economy and the relentless barrage of negative press has spurred a somewhat irrational rush toward liquidation. Perhaps it would be important to remember key lessons from the past, as well as the tried and true valuation determinants prior to the money-lending frenzy. A renewed focus on core principles and fundamentals, such as accurate valuation, efficient process management and rapid execution, is key to the market’s recovery.