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Thursday, 2 July 2009

75% of all private equity backed exits end in "receivership"

Nottingham University Business School's Centre for Management Buy Out research also reports that 86% of all exits where the MBO value was under £10m are into administration or receivership.

This is frustrating when some could possibly have been restructured using company voluntary arrangements (CVA)?

This report has been widely covered today in the financial press, with many comments made on over gearing and too much leverage.

A cogently structured CVA could lead to protection of senior debt holders exposure and or a haircut, a dividend recovery for some of the junior debt holders and of course the trade and tax creditors. CVA is as powerful as administration in most situations and is MUCH LESS damaging to the underlying business.

See our case study for Futuremedia plc as a good example of innovative CVA restructuring.

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