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GoldenTree’s Steven Tananbaum on the importance of entry price in distressed investing

Goldman SachsSteven Tananbaum
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  • The industry involved in the transaction was shrinking and experiencing frequent Chapter 22 and 33 filings.
  • The entity generated $800 million in profit from the directory business.
  • The directory business operated in a highly competitive market yet achieved returns in the "high 20s."
  • Success was attributed primarily to an average entry price of 1.5 times enterprise value.
  • The strategy favored acquiring companies with management teams that prioritized capital return over reinvention.
  • A specific negotiation occurred with a Canadian management team that argued the business was failing and required reinvestment to avoid liquidation.
  • The acquiring firm declined the management team's proposal to spend capital on reinvention, explicitly stating a preference to avoid liquidation.
GoldenTree’s Steven Tananbaum on the importance of entry price in distressed investing — Summary