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New Turnarounds Prep For Distressed Wave

This article appears courtesy of Institutional Investor

Source: Corporate Financing Week

Matthew Craft

A batch of turnaround buyout shops have recently opened their doors and begun marketing new funds under the assumption the current boom in buyout activity and the expansion of credit markets will bring them plenty of distressed companies in the next few years.

"Historically, this is a relatively underserved space," said Kevin Prokop , a director in the private equity group at Questor Management Company , which runs a group of funds in Southfield, Mich. "And [some firms] are aware of the opportunity there in the next few years as the leveraged loan market comes home to roost," he added, pointing to the expectation that lower-quality companies will begin to trip their covenants or have a hard time refinancing as interest rates rise. Questor was co-founded by Dan Lufkin .

Michael Madden , the former co-head of investment banking at Lehman Brothers , recently left Questor to start his own turnaround private equity shop, BlackEagle Partners . His shop has picked Probitas Partners to raise a fund with a $250 million target. Other turnaround firms currently marketing their first funds include Industrial Opportunity Partners and Monomoy Capital Partners .

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