Key Takeaways
- Distressed acquisitions require multi-party negotiation with the seller, lender, and lien holders simultaneously.
- Demonstrate to the lender that a negotiated sale provides better recovery than foreclosure—lenders are motivated by loss mitigation.
- Negotiate mechanic's lien settlements at 70-80% of face value in exchange for immediate release at closing.
- Distressed acquisitions can create 25-40% equity returns in 12-18 months when all parties receive better outcomes than foreclosure.
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Test Your Knowledge
1.What characterizes distressed acquisition negotiations?
2.How should mechanic's lien settlements be negotiated in distressed acquisitions?
3.What return profile do distressed acquisitions typically offer?