Some distressed companies are best served not by restructuring debt or cutting costs, but by finding a new owner who brings capital, management, and vision. We describe our special situations thesis.
In Blue Mountain’s Special Situations division, we work with companies in difficulty that have a viable business underneath the problems. Our premise is that, in many cases, the best way to restructure a company is not to negotiate with banks or slash costs, but to find a new owner who brings what the company needs.
Viable business with an exhausted owner. The founder has spent years managing the crisis, is tired and demotivated. The company needs renewed leadership that a new owner can provide.
Excess debt but healthy operations. The company generates positive EBITDA but debt service consumes all cash flow. A new owner buying free of debt gives the company the financial breathing room it needs.
Capable team without resources. The management team knows what needs doing but lacks the capital to do it. A new owner providing capital and strategic vision can unlock unrealised potential.
Insolvency or pre-insolvency situation. In certain circumstances, acquiring a company (or its productive assets) in insolvency is the best solution for preserving employment, maintaining activity, and maximising creditor recovery.
Core business viability. Remove the debt, put in competent management, invest what is necessary — can this business generate profits? If yes, there is opportunity. If no, there is nothing to do.
Asset quality. Clients with contracts, equipment, property, brand, human team — which assets have real value?
Cost of the solution. Is the restructuring cost less than the value of the restructured company?
Execution risk. Does the restructuring depend on factors we control (management, investment) or factors we do not (regulation, market)?
It is important to be clear about what we do not buy. We do not invest in every distressed company. There are situations where acquisition is not the solution.
Companies with no viable business. If demand for the product or service has vanished — through technological change, regulation, or market evolution — no amount of new management or capital can revive a dead business. Before investing, we verify that demand still exists.
Companies with serious legal problems. Tax fraud, criminal liability of directors, environmental litigation with significant exposure. Legal risk is not resolved by a change of ownership and can contaminate the new owner.
Companies where the cost of the solution exceeds the value. If stabilising a company requires investing 5 million euros and the stabilised company is worth 4 million, the transaction makes no economic sense. This seems obvious, but many investors underestimate the cost of restructuring.
Companies with toxic culture. If the problem is not financial but cultural — a divided management team, a destroyed union relationship, a damaged reputation with clients — the cost of repairing that culture can be prohibitive and the timelines unpredictable.
Buying a distressed company follows a different process from buying a healthy one. Timelines are shorter, available information is more limited, and risks are greater. Our process follows a defined sequence.
Phase 1: Triage (1-2 weeks). Rapid assessment of core business viability. Are there clients? Is there a team? Are there productive assets? If the answer is yes on all three, we proceed. If not, we pass.
Phase 2: Focused due diligence (2-4 weeks). We do not conduct a standard six-month due diligence. We carry out a focused examination of critical points: actual financial position, hidden liabilities, key contracts, management team, employment situation. We look for mines, not details.
Phase 3: Stabilisation plan (concurrent with phase 2). Before closing, we prepare a detailed first-100-days plan: what decisions must be made immediately, what investments are needed, what people must be hired, what costs must be cut.
Phase 4: Closing and execution. Closing must be rapid. In distressed companies, every week of delay deteriorates the situation. Once the transaction is closed, we execute the 100-day plan with discipline.
In one case, we acquired a services company that had entered difficulty from a combination of losing a major client and poor cost control. The company had an excellent technical team, active contracts, and a solid market position — but no financial management or strategic leadership. We bought it, injected working capital, hired a CFO and operations director, and renegotiated creditor terms. Within two years, EBITDA reached 10% of revenue. Employment not only held but grew 20%.
In another transaction, we acquired the productive assets of an industrial company that had entered insolvency proceedings. The productive unit — machinery, client contracts, qualified staff — had real value. We bought it free of debt, invested in machinery modernisation, and commercially repositioned it. Within three years, it doubled its turnover.
Special situations deals carry social value beyond financial returns. When a company closes, jobs, technical capabilities, commercial relationships, and community economic fabric are lost. In many towns across inland Spain, a mid-sized company may be the municipality’s main employer. Its closure is not just an economic datum — it is a social tragedy.
When an investor buys that company and turns it around, all of that is preserved. Employees keep their jobs. Clients keep their supplier. The community keeps its company. Creditors recover a greater share of their debt than in a liquidation. And the investor earns a fair return for having assumed the risk and provided the capital and management needed.
It is not philanthropy. It is business. But it is business with positive impact — and for us, the most satisfying way to invest.
The first step is always a conversation. Contact Blue Mountain.
See also: Financial vs operational restructuring · How to sell a company in Spain · The importance of the management team · Our investment thesis · The cost of doing nothing.
Dirk Manuel Martens Jimenez Founder, Blue Mountain Capital
If you wish to explore a potential collaboration or present an investment opportunity, we invite you to contact us. We guarantee absolute confidentiality in all our conversations.