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Smaller Firms Good Fit for Distressed Investment

Established in 1995, Connecticut-based Contrarian Capital Management, LLC, focuses on distressed investment financings and management of such assets. Barron’s recognized two of Contrarian Capital’s hedge funds as among the top performers in the United States. 

Large investment firms continue to experience the limitations imposed by new state and federal banking regulations. Moreover, the current credit crunch creates increased pressure for large firms to generate revenue for shareholders. In this environment, many distressed asset financings today involve smaller firms with more flexibility to wait for such companies to begin to perform favorably or attract new buyers.

Small firms often hold the upper hand in acquiring distressed assets and managing them successfully because they can develop strategies based on long-term goals rather than structured benchmarks. In some cases, larger firms sell assets before they reach their optimal value because the assets have exceeded their risk appetite. A smaller firm that specializes in distressed investing often provides cash, management, and other oversight to help a company emerge from financial volatility. Most large firms focus on increasing wealth in the markets rather than in the board room, but a smaller firm will build wealth with a cohesive, overall approach to stabilizing businesses.