Chapter 10: Special Situations and Event-Driven Strategies

In this section

• Distressed Investing and Restructuring Opportunities
  Distressed Investing and Restructuring Opportunities (CFA Level 1): Lifecycle of a Distressed Investment, Spotting Early Warning Signals, and Key Legal Frameworks in Distressed Situations. Key definitions, formulas, and exam tips.
• Merger Arbitrage, Spin-Offs, and Divestitures
  Merger Arbitrage, Spin-Offs, and Divestitures (CFA Level 1): Mechanics of Merger Arbitrage, Why a Discount Persists, and Cash Deals vs. Stock-for-Stock Deals. Key definitions, formulas, and exam tips.
• Capital Structure Arbitrage and Litigation Finance
  Capital Structure Arbitrage and Litigation Finance (CFA Level 1): Understanding Capital Structure Arbitrage, Analytical Frameworks and Structural Credit Models, and Role of Credit Default Swaps (CDS). Key definitions, formulas, and exam tips.
• Risks, Returns, and Portfolio Considerations
  Risks, Returns, and Portfolio Considerations (CFA Level 1): Risk Spectrum of Event-Driven Strategies, Correlation with Broader Markets, and Approaches to Measuring and Managing Downside Risk. Key definitions, formulas, and exam tips.
• Post-Bankruptcy Equities and Turnarounds
  Post-Bankruptcy Equities and Turnarounds (CFA Level 1): Post-Bankruptcy Equity: A New Beginning, Capital Structure After Bankruptcy, and Illustrative Capital Structure Flow. Key definitions, formulas, and exam tips.
• Asset-Based Lending and Collateral Coverage
  Asset-Based Lending and Collateral Coverage (CFA Level 1): Fundamentals of Asset-Based Lending, Collateral Coverage Fundamentals, and ABL in Distressed or Sub-Investment-Grade Situations. Key definitions, formulas, and exam tips.
• Activist Investing in Special Situations
  Activist Investing in Special Situations (CFA Level 1): Understanding Activist Investing, Why It Matters, and Key Concepts in Activist Investing. Key definitions, formulas, and exam tips.
• Regulatory Timelines and Transactional Complexities
  Regulatory Timelines and Transactional Complexities (CFA Level 1): Key Regulatory Approval Processes, Antitrust Clearances, and Foreign Investor Reviews. Key definitions, formulas, and exam tips.
• Liquidations and Receiverships
  Liquidations and Receiverships (CFA Level 1): Voluntary vs. Involuntary Liquidation, Role of Trustees, Courts, and Receivers, and Hierarchy of Claims and Payout Structure. Key definitions, formulas, and exam tips.
• Secondary Market for Trade Claims
  Secondary Market for Trade Claims (CFA Level 1): Defining Trade Claims and the Secondary Market, Connection to Distressed Investing, and Why a Secondary Market Exists. Key definitions, formulas, and exam tips.
• Leveraged Recapitalizations and PIK Structures
  Leveraged Recapitalizations and PIK Structures (CFA Level 1): Leveraged Recapitalizations: The Basics, Motives and Strategic Rationale, and Payment-in-Kind (PIK) Debt Structures. Key definitions, formulas, and exam tips.
• Shareholder Activism Tactics and Outcomes
  Shareholder Activism Tactics and Outcomes (CFA Level 1): Constructive vs. Adversarial Activism, Core Tactics of Activist Investors, and Key Outcomes and Implications. Key definitions, formulas, and exam tips.
• Hostile Takeovers and Proxy Contests
  Hostile Takeovers and Proxy Contests (CFA Level 1): Typical Sequence of a Hostile Takeover, Unsolicited Offer, and Tender Offer. Key definitions, formulas, and exam tips.
• Cross-Border M&A and Currency Risks
  Cross-Border M&A and Currency Risks (CFA Level 1): Complexities in Cross-Border M&A, Differing Legal Systems and Regulatory Frameworks, and Legal Hurdles and Corporate Governance. Key definitions, formulas, and exam tips.
• Splits, Reverse Splits, and Special Dividends
  Splits, Reverse Splits, and Special Dividends (CFA Level 1): Mechanics of Stock Splits, Reverse Stock Splits, and Rationale for Splits and Reverse Splits. Key definitions, formulas, and exam tips.
• Legal and Compliance Issues in Event-Driven Deals
  Legal and Compliance Issues in Event-Driven Deals (CFA Level 1): Understanding Key Legal and Compliance Elements, Insider Trading, MNPI, and Disclosure Requirements, and Confidentiality Agreements and NDAs. Key definitions, formulas, and exam tips.