April 2022 | Finance
There’s a perfect storm coming for distressed asset investing. The market will be flooded with opportunities, and investors are ready to move on them. But the asset class has changed and knowing how and what today’s market requires is a key to seeing returns. Kevin Kaiser, senior director of Wharton’s Harris Family Alternative Investments Program, says many on both sides — investors as well as CFOs and other senior business leaders — aren’t prepared for what’s coming.
“Funds available for investing have skyrocketed, and investors seem poised to deploy it soon. Companies that made it (barely) through the pandemic need to know what to expect when those investors turn their attention to them,” says Kaiser. “On the other side, investors need to understand recent changes in distressed asset investing — it’s not about the relatively quick operational improvements that were once required. If you are an institutional or family office investor, you can give money directly to asset management firms, but you should know more about distressed asset investing before you do. Learn the kinds of questions you should ask before you invest. Understand why the returns on distressed asset funds have been so much higher than those on flagship hedge funds, and whether those returns are sustainable.”