Distressed Sale Discounts

Developing a Thoughtful Approach to Selecting a Discount to Apply

In restructuring contexts, particularly in relation to Restructuring Plan relevant alternatives and Scheme comparators, it is common to see discounts applied to valuation estimates derived on the basis of the conditions of an orderly sales process. These discounts are often material and consequently can have a significant impact on the valuation conclusions. It is therefore essential that the valuer is able to clearly articulate the circumstances of the salesprocess envisaged and how it deviates from the conditions of an orderly sales process.

In this context, we set out a summary of the key factors to consider when forming a view on an appropriate discount, examine a selection of discounts previously used by valuers, and summarise the skills and experience of relevant FTI Consulting experts.

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