In-bonis and distressed: one question, two moments

One thesis, two regimes

What separates our two categories of transaction is not the question the acquirer is asking. It is the moment in the target's life at which the question is asked, and therefore the legal formalism and the calendar that follow.

An Indian manufacturer looking for certified production capacity in Europe, access to the regulated European market, or a know-how they do not hold, is pursuing exactly the same thesis whether they execute it on a healthy company or on one in receivership. The thesis does not move. What moves is the set of execution skills required.

What actually differs

On an in-bonis file, the target is healthy, profitable or recoverable, and its owner is in a position to negotiate a voluntary sale. The operation is a share deal: titles and liabilities transfer together, secured by a representations-and-warranties package. The calendar is set by the parties, nine to eighteen months. Value is anchored on an EBITDA multiple, with an off-market discount of 15% to 30% against what a formal competitive process would have produced. The counterparty is the owner and their advisers, and the outcome turns on price and the terms of the owner's exit.

On a distressed file, the target is in established difficulty, confidential prevention proceedings, safeguard, receivership, or a court-supervised going-concern sale plan. The calendar is imposed: a few weeks to three months, fixed by the court or by the date the cash runs out. Price is constrained by continuation value and by competing offers; the discount is real but bounded, because the business has to keep operating. The counterparty is the judicial administrator, the mandataire ad hoc or the conciliator. And the decisive criterion is not price: it is the preservation of employment and the seriousness of the takeover plan.

That last point is the one foreign acquirers most often get wrong. In a French or Spanish procedure, the highest offer does not win by default. The credible industrial project does.

Price is what the situation imposes; value is what the business is worth

The distinction is the foundation of the work. Price is a function of the circumstances of the transaction. Value is what the company is worth in the hands of an operator who can run it.

On a distressed file the price compresses for reasons that are cyclical and procedural, urgency, the absence of informed buyers, the legal obligation to realise. The intrinsic value has not moved at all. An EU GMP inspected site, a book of large-account customers, a homologated supplier position on a vehicle platform in production: in the hands of a buyer able to operate them, these are worth exactly what they were worth the day before the procedure opened.

Our role is to make that value visible to a buyer who, on their own, would not have seen it, and to be honest when the value genuinely has gone.

A mandate that can change regime mid-flight

This is the practical argument for holding both competencies, and it is the one that matters commercially. A target approached as an in-bonis opportunity whose situation deteriorates during the process does not cost the mandate. It changes legal regime, and the qualification work already done, accounts, ownership, contracts, security interests, certifications, remains entirely usable.

The reverse happens as often and is almost always the better outcome: a file first read as distressed turns out to be treatable through an amicable agreement before any procedure opens. For the acquirer, that is a cleaner transaction at a comparable price.

An adviser who only does healthy-company M&A has to hand the file back when it deteriorates. An adviser who only does insolvency work never sees the file until it is already in court.

What the second regime demands

Distressed execution is not in-bonis execution done faster. It requires reading a procedure and knowing what is actually reprisable within it; producing an offer that meets the procedural standard in a matter of weeks; and access to the officers of the procedure, which is a matter of relationships built over years, not of subscribing to a bulletin.

It also requires accepting a hard rule: the offer is issued and signed by the acquirer, never by us. We prepare the file, we manage the court calendar, we coordinate the advisers. We do not step into our client's shoes.